Trump's Stock Market Grab: What It Means For Nvidia, Intel And The U.S. Economy
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Following the money — federal government largesse — is a well-traveled path on Wall Street. But President Donald Trump has added a twist — following the golden shares, or new equity stakes that give the government a special interest in companies' fates.
Stock market investors have bid up Intel ( INTC), MP Materials ( MP) and the entire U.S. steel sector after Trump leveraged U.S. government support to pry away significant equity stakes or effective veto power. Trump's readiness to intervene on behalf of chosen companies, even at the cost of competitors and customers, clashes with traditional Republican views that the economy thrives when the government stays out of the way of markets.
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?NOW PLAYINGThe U.S. Now Owns 10% Of Intel. What That Means For America’s Chip Supply.
Like it or not, a brash new Trump economy is ringing in elements of state capitalism. Building on the sweeping Trump tariffs, the White House is pushing into previously out-of-bounds business activity, from a golden share in U.S. Steel to taking a cut of the proceeds from Nvidia ( NVDA) and AMD ( AMD) AI chip sales to China.
Those moves are unprecedented "pay-to-play arrangements," International Institute for Strategic Studies senior fellow Maria Shagina wrote on Sept. 15. They "reflect the administration's increasingly transactional approach to corporate America — an approach that challenges the foundations of the traditionally market-oriented U.S. system."
Extraordinary interventions may be warranted when there's a strategic necessity. Factories seizing up after Beijing froze rare earth magnet exports surely cleared the bar. Efforts to keep the last advanced U.S. chipmaker from going fabless may be defensible.
Yet the Trump economy's state capitalism may be a slippery slope. Favored firms and their stocks may thrive, but competition and the U.S. economy could suffer long term.
Controlling Stock Market StakesThe U.S. only holds an actual "golden share" of U.S. Steel, which can't be sold on the stock market and has no financial value. But its position as top shareholder and most important benefactor gives it equivalent control over Intel and MP Materials.
The golden share gives Trump a veto over Nippon Steel's newly acquired U.S. operations. So he never has to worry about getting burned by a plant closure or layoffs. Trump already exercised that power in September to keep a U.S. Steel plant in Illinois operating.
Trump also pushed Nippon to invest $14 billion to upgrade U.S. Steel plants and build a new one, spending $11 billion by 2028.
The onerous terms were to compensate for national security concerns, "which did not exist" given that Japan is a close ally. That's according to Stephen Heifetz, partner at the law firm Wilson Sonsini Goodrich & Rosati, in a Council on Foreign Relations piece. This "could make other foreign suitors think twice about the U.S. market."
Trump Tariffs Part Of State CapitalismNippon Steel might have balked, but Trump threw in a clincher — doubling the tariff on steel imports to 50%. "Nobody's going to get around that," Trump assured steelworkers while celebrating the deal's closure at a May 30 rally.
The U.S. government doesn't have a direct financial stake in Nippon or even its U.S. operations. But Trump put his credibility on the line in the deal, backed by a high wall of protectionism. That helped ignite U.S. steel stocks. Beaten-down shares of Cleveland-Cliffs ( CLF) have more than doubled. S&P 500 members Nucor ( NUE) and Steel Dynamics ( STLD) have climbed by 24% and 16%, respectively, since May 30.
"Foreign competitors need to acquire steel capacity within the United States if they want to participate in this desirable market," Cleveland-Cliffs CEO Lourenco Goncalves said on July 21. He made it clear that his company would entertain any offers.
Steel tariffs hike costs for automakers and many other manufacturers. That complicates the Trump economy's goal of boosting U.S. factory activity.
MP Materials, Intel Soar On U.S. Equity Stakes
MP Materials, which operates the world's second-largest rare earths mine in Mountain Pass, Calif., has spiked 146% as of Oct. 7 since the Department of Defense put up $400 million to become the largest shareholder, with a 15% stake. Intel has surged 67% since news broke on Aug. 14 that the White House was in talks to convert CHIPS Act funding of the embattled chipmaker into an equity stake.
The story appears much the same at Lithium Americas, whose Thacker Pass project in Nevada is one of the world's largest-known lithium deposits. Lithium Americas stock has soared 169% since news emerged on Sept. 24 that the Trump administration might take an ownership stake. Confirmation came on Sept. 30.
The explosive stock market impact of Trump's equity investments has propelled shares of other small mining stocks, even though analysts questioned whether the actual terms of the investment were all that beneficial.
Lithium Americas gets to defer payment on a $2 billion loan approved by the Biden administration. In return, the federal government gets a 5% stake in the Thacker Pass project and 5% stake in Lithium Americas. The U.S. stake may slightly de-risk the project, but it doesn't significantly change its economics and comes at a high cost to shareholders.
Trump's Stock Market WinnersCompanyTickerInitial ReportPrior Closing PricePrice On Oct. 7% Change|
| Nucor | NUE | May 30 | 109.36 | 135.8 | 24% | | Steel Dynamics | STLD | May 30 | 123.07 | 142.73 | 16% | | Cleveland-Cliffs | CLF | May 30 | 5.83 | 12.81 | 120% | | MP Materials | MP | July 9 | 30.03 | 73.79 | 146% | | Intel | INTC | Aug. 13 | 22.22 | 37.19 | 67% | | Lithium Americas | LAC | Sept. 23 | 3.07 | 8.27 | 169% | | Trilogy Metals | TMQ | Oct. 6 | 2.09 | 6.5 | 211% |
Canada's Trilogy Metals ( TMQ) tripled on Tuesday after the White House said it's making a $35.6 million investment for a 10% stake and warrants to receive another 7.5%. The funds will support development of a copper mine in northwest Alaska. Trump also authorized a road that will make the mine accessible.
Prior administrations stuck to grants or loans. Yet Intel and, to a lesser extent, MP Materials show that sometimes a full-fledged government embrace is required to rewrite a company's future.
Back in 2022, the DOD awarded MP Materials $35 million to build a facility for processing heavy rare earth materials. So-called "heavies" feed into end products like samarium cobalt magnets that maintain their magnetic properties under temperatures high enough to liquefy lead. They're critical for military hardware like Lockheed Martin's F-35 and Tomahawk missiles, but the market isn't that big. MP Materials never built the plant because the Biden administration funded a second facility in Texas to be built by Australia's Lynas Rare Earths, which also ran into complications. That left China with a near monopoly.
Pentagon Commitment Spurs More MP Support The Trump administration's MP equity investment is just one part of a transformative multibillion-dollar package.
The Pentagon also agreed to buy neodymium-praseodymium oxide (NdPr) from MP for the next decade at a floor price of $110 per kilogram. NdPr is a key compound in making permanent magnets for electric vehicles, wind turbines and robotics. The price had fallen to around half that level as China flooded the market. That made it hard for MP and other rare earth miners to compete, much less thrive.
As with the White House's Intel investment, the government's equity in MP Materials may be spurring other support. JPMorgan Chase ( JPM) and Goldman Sachs ( GS) put up $1 billion for MP Materials to build a second rare-earth magnet production facility. Apple ( AAPL) committed $500 million to help MP launch a rare-earth metals recycling facility and reached a long-term supply agreement for 100% recycled rare earth magnets.
At the time, the Trump administration appeared to be picking one rare-earths winner. But USA Rare Earth ( USAR) recently confirmed White House talks for a U.S. stake, sending shares soaring. USA Rare Earth is set to open a magnet production facility in Oklahoma in Q1 2026.
Trump Stake Is Intel InsideBefore Trump's equity stake, Intel appeared to be hitting a wall, despite $10.9 billion awarded to the company by the Biden administration to ramp up advanced U.S. chip manufacturing. Over the summer, Intel stock neared a 12-year low. Analysts began to predict a move to a fabless model where Intel would contract out manufacturing after CEO Lip-Bu Tan said in July that Intel had invested too much "without adequate demand." He added that rolling out its next-generation chipmaking process would depend on "confirmed customer commitments."
But then Tan expressed openness to converting $8.9 billion in yet-to-be released CHIPS Act funding into an equity stake.
"I PAID ZERO FOR INTEL, IT IS WORTH APPROXIMATELY 11 BILLION DOLLARS," Trump posted on Truth Social on Aug. 25. "I will make deals like that for our Country all day long." He added: "I will also help those companies that make such lucrative deals with the United States. I love seeing their stock price go up, making the USA RICHER, AND RICHER."
The potential downside was that diluting Intel stock might make further stock market or private funding pricier and harder to come by. However, the opposite also may be true.
Amid news reports that the White House and Intel were near a deal, Japan's SoftBank said on Aug. 18 that it had acquired a $2 billion Intel stake. Nvidia's $5 billion investment for a 4% stake followed one month later.
Intel stock shot up 23% as Nvidia also announced it would become a big customer of Intel's x86 central processing units. Nvidia will use custom x86 chips for its own AI infrastructure platform for data centers. Still, Citi downgraded Intel shares to a sell a day later, saying the deal didn't resolve big concerns about its foundry business.
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Will Trump Mandate Intel Orders?All of Nvidia's chips are made by Taiwan Semiconductor Manufacturing ( TSM), which invented outsourced production for chip-design firms. There's no indication that's changing. "You can't overstate the magic that is TSMC," Nvidia CEO Jensen Huang said at the event announcing its deal with Intel.
For Intel to become a legitimate TSMC competitor, it must have the orders to prove it's up to the job. But why would Nvidia, Apple and others take the risk when they've got a good thing going?
Dan Kim, who served as chief economist for the CHIPS program office under President Biden, told Stratechery's Ben Thompson in a Sept. 11 interview that Intel's lack of orders is probably only resolvable with a government "mandate to source a certain amount" from Intel, giving fabless chipmakers "skin in the game to make Intel Foundry successful."
AMD reportedly is in talks to have Intel make some of its chips.
Such a heavy-handed intervention would overstep prior administrations' view "about what a government should do," Kim said. "But we are now at a place where this particular administration's President doesn't really hold a lot of importance to previous norms and so is willing to break them for an outcome." In Kim's view, the upside would be worth it — not the equity upside of a rising Intel stock price, but the benefits of preserving Intel's research and development arm.
"There's something unique about an American company inventing that future in the U.S. and having it be an American technology that it controls."
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Nvidia's Jensen Huang Needs To Be On Trump's Good SideHuang insisted that the Trump administration played no part in Nvidia's investment in Intel. He touted the deal's benefits, including an expansion of Nvidia's market opportunity into laptops.
Every U.S. corporate titan has reason to get on Trump's good side, but Huang has more than just about anybody. In recent weeks, Nvidia has been hit by setbacks in China. Beijing blocked sales of its AI chips, including the H20 chip that Trump had let Nvidia export to China in return for a 15% revenue cut. Then, even as U.S.-China talks yielded TikTok progress, Beijing announced that Nvidia had violated anti-monopoly provisions.
A grand U.S.-China bargain appears to be shaping up. Beijing is ready to permit the sale of TikTok's U.S. operations, which Trump has said is a priority. China may even be willing to give up its leverage over rare-earth magnets and restore unfettered exports. That is, if the price is right.
AI Chip Export ControlsYet the two sides may still be far apart on U.S. export controls over AI-related chips and chipmaking. Without a grand bargain, Nvidia could be out of luck in rebooting its H20 sales. Nvidia also is seeking approval to sell China a toned-down version of its new Blackwell chip.
The payoff that Trump sees as just desserts, others see as an unconstitutional export tax and a conflict of interest. "Export controls are a front-line defense in protecting our national security, and we should not set a precedent that incentivizes the Government to grant licenses to sell China technology that will enhance its AI capabilities," Rep. John Moolenaar, R-Mich., said in an August statement.
But critics see the Biden administration's export controls on AI chips as self-defeating.
China is "nanoseconds behind us," Nvidia's Huang told the BG2 podcast on Sept. 25. "Why would we not allow (our technology) industry to go and compete for its survival" — including in China, the biggest market? Having the world "built on top of American technology" will maximize U.S. geopolitical influence, he said.
Yet allowing tech companies to compete — if they pay a tax — is less than optimal. Tax Policy Center fellow Howard Gleckman wrote that Trump's levy on Nvidia chip sales will "ultimately make U.S. chipmakers less competitive" if Beijing lifts its current ban and lets them go toe-to-toe with the likes of Huawei.
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'Ad Hoc' Sovereign Wealth Fund? Trump has favored the idea of a sovereign wealth fund. The fund could provide "patient, long-term capital" to support "early-stage quantum companies, help national laboratories commercialize technologies, and ensure U.S. breakthroughs remain domestically controlled," former Intel CEO Pat Gelsinger wrote in a Wall Street Journal op-ed in July.
Countries with large sovereign wealth funds, however, tend to be undemocratic, have vast state-owned oil-and-gas resources, or have large budget surpluses and foreign exchange reserves.
That's left Trump to try and come up with unorthodox funding sources. Along with turning CHIPS Act grants into equity, cashing in gold reserves has been floated. Trump's big play so far has been to twist trading partners' arms to put up investment funds — $550 billion from Japan and $350 billion from South Korea — or face higher auto tariffs. It's not clear how much money will materialize and how soon. Both Japan and South Korea have discussed providing loans or guarantees, rather than up-front cash.
Norway's $2 trillion fund, most of which is invested in the global stock market, is legislatively grounded, Instead of a legislatively grounded, wrote Winston Ma, an adjunct professor at New York University School of Law who headed China Investment Corp.'s North America office. By contrast,, Trump "has taken an ad-hoc path, using executive power to direct capital into strategic sectors."
Stock Market Fuel Isn't Cost-FreeThe full consequences of the sharp turn in economic policies may not be known for a long time, but policymakers across the political spectrum have concerns.
Trump's recent corporate interventions "have so far been structured to secure public gains," Joel Dodge, director of industrial policy and economic security at the Vanderbilt Policy Accelerator, wrote in the Washington Monthly.
Yet if Congress fails to set ground rules for taking golden shares and revenue deals like the one with Nvidia — and there's no indication it will — it will be blessing "Trump's mode of industrial policy by one-man dealmaking." That could open the door to "cronyism, corruption, and favoritism for well-connected dominant firms."
Investing in the stock market alongside Trump has paid off when he's willing to use the full force of government to shift industry dynamics. Shares of MP Materials and Intel reflect that. Yet the Trump economy's push into state capitalism is just getting started, and there's reason to worry about where it could lead.
"Acting as both regulator and shareholder generates conflicts of interest on an epic scale," Veronique de Rugy, senior fellow at George Mason University's Mercatus Center, wrote in a Los Angeles Times op-ed.
If the regulatory state becomes a tool to extract concessions, favored firms may still thrive. But competition, innovation and ultimately even the stock market might suffer. |
