The U.S. is aggressively buying stakes in publicly traded companies. The strategy is winning broad support--and the stocks are flying. By Joe Light

Uncle Sam is becoming America's most powerful investor, taking big stakes in companies to bolster supply chains and make money for taxpayers. Both goals have bipartisan support, which suggests this new shareholder activism will far outlast President Donald Trump's administration.

Under this unfolding form of American state capitalism, the U.S. is pushing the boundaries of its legal authority to invest billions of dollars in a growing number of companies in return for stock. A third driving force is to beat China, whose control over some materials and manufacturing processes has exposed critical national security weaknesses for the U.S. amid trade tensions.

Under Trump, the government has taken stakes in chip maker Intel and critical minerals firms such as MP Materials and Lithium Americas. Lawyers say some company boards are clamoring to take on the government as a shareholder, while others are wary that they may be forced to give up equity or some sort of control in exchange for permits or other approvals. Some managers believe U.S. investment has given their firms a leg up, although free-market advocates warn there is a litany of examples where government heavy-handedness has had poor consequences for the economy. While some Democrats criticize the moves as lacking strategy, the taking of equity stakes in some cases has bipartisan support.

Trump officials say they're just getting started. Treasury Secretary Scott Bessent has said the White House is homing in on industries critical to U.S. national security. The idea is to avoid an overreliance on China, which government officials say has manipulated prices to undercut U.S. industries and give itself a strategic advantage.

"I wouldn't be surprised" if the U.S. took more stakes in private companies, Bessent said at a CNBC event on Oct 15. "When you are facing a non-market economy like China, then you have to exercise industrial policy."

Just as often, the White House's targets seem to be ones of opportunity. The U.S. took its stake in Intel days after Trump called for the ouster of its CEO, with Trump arguing that he was rectifying an unfair deal for taxpayers made by President Joe Biden's administration. In November 2024, the Biden administration announced that Intel would receive nearly $8 billion in grants to support the company's $100 billion investment in building semiconductor projects in the U.S., but the U.S. didn't receive any equity as part of the deal.

In addition to the national security goals, White House and cabinet officials say they want to make money for taxpayers. "Why are we giving a company worth $100 billion this kind of money? What is in it for the American taxpayer? And the answer Donald Trump has is we should get an equity stake for our money," U.S. Commerce Secretary Howard Lutnick told CNBC as the Intel stake was completed.

The Defense Department invested $400 million in July in MP Materials, which operates a rare earth mine in California. The preferred stock and warrant for common stock give the government a 15% stake in the company, making the U.S. its largest shareholder. As part of the deal, the government also guaranteed a minimum price for some of its rare earth products and said the Pentagon would find customers for 100% of the magnets produced at a new facility for a decade after its completion.

This month, the government struck two more critical minerals deals, taking 5% stakes in Vancouver-based Lithium Americas and in one of its joint ventures, and a 10% stake in Vancouver-based Trilogy Metals with warrants to acquire another 7.5% of the company. In addition to the money, the U.S. approved a 211-mile road for a mineral project in Alaska, reversing a decision made by Biden.

A U.S. investment is "enormously accelerating and transformational and valuable," says Brian Menell, CEO of TechMet, a mining and mineral investments company. The first Trump administration invested $25 million in TechMet in 2020 through the U.S. International Development Finance Corp., which Congress originally created in 2018 to support development projects in low-income countries. The DFC during the Biden administration invested another $80 million.

A U.S. equity investment de-risks projects in the eyes of other investors and foreign governments. Menell says the U.S. involvement was a major selling point when TechMet raised $180 million from the Qatar Investment Authority.

"Governments around the world are very respectful of U.S. interests unless they're completely stupid," Menell says. "It's been positive for us everywhere."

Despite talk early in the administration of creating a sovereign-wealth fund, the White House says it isn't seeking to build a large portfolio of U.S. companies. It sees equity stakes as just part of its tool kit to firm up the U.S. supply chain. "The point with equity stakes is that the president is making sure the taxpayer isn't needlessly giving out money with no strings attached," said a White House official, who called any financial returns to taxpayers an "ancillary benefit" to national security interests.

There is no one person at the White House tasked with overseeing a portfolio of investments, the official said.

Critics note that taking stock in a company doesn't necessarily do much to firm up supply chains. The U.S.'s original deal with Intel provided the company with grants, loans, and tax incentives in exchange for the company meeting certain milestones to build semiconductor projects in the U.S., an endeavor that Intel and other chip makers said wasn't otherwise economically viable. As part of the deal to convert the grants and loans into equity, the Trump White House removed the milestones.

Some deals have given the U.S. influence over corporate actions but without any stock. In August, Nvidia and Advanced Micro Devices agreed to give the U.S. 15% of their revenue from artificial-intelligence chip sales to China in exchange for export licenses. Later in the month, the White House said the deal hadn't been finalized -- and China banned the chip sales, in any case. An Nvidia spokesman declined to comment. AMD didn't respond to a request for comment.

As a condition for approving the sale of U.S. Steel to Japan's Nippon Steel, the government received a so-called "golden share," giving it veto power over some corporate actions.

"These demands to take a percentage of profits or actual equity ownership to operate in different markets are nothing more than extortion schemes," says Jeffrey Sonnenfeld, president of the Yale Chief Executive Leadership Institute.

The rare-earth deals have kicked off a gold rush among companies looking to see if they can get Uncle Sam as an investor as well. Just this week, The Wall Street Journal reported that some quantum computing companies are in discussions to give the Commerce Department equity stakes in exchange for funding. The Commerce Department in a statement to Barron's said it is not negotiating equity stakes with quantum companies.

Y. David Scharf, one of Trump's former attorneys, says 20 to 30 companies -- in industries ranging from critical minerals to manufacturing and robotics -- have reached out to him to see if he could help line up a U.S. investment, which he has whittled down to a "handful" for pitches to government agencies. Although the investment discussions are often to further national security interests, he says government officials are also looking for a positive investment return.

"Everyone is working across the table from each other to make money," says Scharf.

The government hasn't released a comprehensive accounting of what it has made from its investments, but anecdotally, the returns so far are robust.

TechMet's Menell says the government has made 30% annually on its investment in the private company. MP Materials recently traded at around $83, more than double the conversion and exercise price that the company gave the government in its funding deal. In exchange for deferring $184 million in debt payments, the government received 5% of Lithium Americas, a stake worth $93 million. And in perhaps its most lucrative investment, the government in August agreed to buy 9.9% of Intel at $20.47 per share, a discount to the market price. The stock recently traded at around $38.

On its face, the government's terms have often looked dilutive to private shareholders. But in the early days, a U.S. investment has almost always been accompanied by a surge in the target's share price. Shareholders have enjoyed gains alongside the government.

Trump officials have pointed to several industries they view as critical to national security interests that could end up getting U.S. investments. Lutnick and Trump in interviews have suggested that defense contractors, who often have the U.S. as their biggest or only customer, could be targets. At the CNBC event on Oct. 15, Bessent said that the U.S. had identified seven critical industries where equity stakes might be on the table, but didn't name them. "We're not going to come in and take stakes in nonstrategic industries," he said. "We do have to be very careful not to overreach."

The Treasury Department didn't respond to requests for comment on what the seven industries are.

In many cases, the government is giving support to industries that traditionally have found it too risky or expensive to operate in the U.S. Setting up a rare earths mine is risky even before taking into account the minerals' highly volatile prices. Steel companies for years have said they can't compete with China's state-sponsored companies, which sell some forms of steel at prices that would cause the U.S. firms to lose money. Congress passed the Chips and Science Act in 2022 in part because nearly all advanced chipmaking happens in Taiwan.

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October 24, 2025 21:31 ET (01:31 GMT)

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