Apple (AAPL), the world’s third-largest company by market cap, has agreed to buy rare earth magnets from MP Materials (MP). Shares of the mining firm are up more than 20% at writing.  

On Tuesday, the iPhone maker announced a $500 million agreement that will see it establish a commercial-scale rare earth magnets recycling facility in collaboration with MP Materials as well. 

Including today’s rally, MP stock is up nearly 290% versus its year-to-date low set in late May. 

Why Did MP Stock Soar on Apple Deal?

Apple’s announcement as part of its broader commitment to invest up to $500 billion to onshore production is significant as it locks MP Materials into a multi-year supply chain role for one of the world’s most valuable firms. 

Investors are cheering the AAPL deal because what it means for the rare earth materials company is long-term revenue visibility, strategic validation, and national importance. 

Essentially, it positions MP as a cornerstone of U.S. rare earth independence, reducing reliance on China and aligning with Pentagon-backed initiatives. 

With magnet shipments expected to support hundreds of millions of Apple devices from 2027, the NYSE-listed firm gains scale, credibility and investor confidence, all of which could translate into a further increase in MP share price in the back half of this year. 

Is There Any Further Upside Left in MP Shares?

MP Materials shares continue to extend gains also because the Pentagon announced a $400 million investment in the mining firm last week, effectively becoming its largest shareholder. 

However, the explosive move to the upside warrants caution in buying MP stock as it’s egregiously overvalued at current levels. 

MP shares have a forward price-sales ratio of more than 36x at the time of writing, which is well above a number of AI stocks, even including Nvidia (NVDA) that’s going for less than 31x only. 

How Wall Street Recommends Playing MP Materials

Wall Street firms continue to abstain from raising estimates for MP shares due to valuation risks as well. 

While the consensus rating on MP stock remains at “Moderate Buy,” the mean target of about $31 indicates potential downside of up to 50% from current levels.