Abstract
This study examines whether the artificial intelligence (AI) infrastructure boom has created a measurable financial link between rare earth markets and the Magnificent Seven technology equities. Using daily data for the VanEck Rare Earth and Strategic Metals ETF (REMX) and the Solactive Magnificent Seven Index (MAG7) from November 1 2022, to June 30 2026, the study evaluates two dimensions: 1) long-run equilibrium and 2) short-run causality dynamics. The analysis applies Engle-Granger co-integration testing to price levels and Granger causality to log returns. The results provide no evidence of a stable long-run equilibrium and no statistically significant causal relationships between the two markets over the full sample. The findings suggest that the physical dependency between AI infrastructure and critical minerals is economically plausible but has not yet translated into a stable or detectable equity-market transmission mechanism.
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Recommended Citation
Mehra, Payal
(2026)
"The AI-Rare Earth Paradox: Physical Dependence without Financial Integration,"
Critical Letters in Economics & Finance:
Vol. 3:
Iss.
2, Article 3.
doi:https://doi.org/10.21427/3hdq-h198
Available at:
https://arrow.tudublin.ie/clef/vol3/iss2/3
DOI
https://doi.org/10.21427/3hdq-h198