Rare Earth Truce: The Promise that Wasn’t

Detailed summary

One year after the Busan handshake, China still decides who gets rare earths, how fast, and how much. Washington calls it cheating. Beijing calls it licensing. Either way, the West is about to pay up. At the same time, rare earth stocks have rarely been this hated.

We saw some intense volatility, and plenty of fears that the whole shebang was about to collapse.

We’ll see what this week brings. But understand this: the AI trade and the AI buildout are two different things.

Whatever happens with stocks, the AI buildout is set to continue at breakneck pace.

The major hyperscalers have committed more than US$900 billion to new data centres for 2027. That’s more than has been invested since the dawn of ChatGPT through to today.

But my gut says Big Tech will find a way to navigate any newfound blockades imposed by Democrat powerbrokers.

In short, expect both the red and blue teams in Washington to keep backing big tech’s AI ambitions.

That means the buildout, and the support it gives to certain commodities like copper, continues, even if AI-aligned stocks continue to get hammered.

Yet while everyone was glued to the AI trade, a far quieter story was breaking.

More cracks are appearing in a key agreement between the US and China on rare earths.

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