Introduction

The U.S. government has quietly built a roughly $27 billion portfolio of equity stakes in private companies since early 2025 . And that push is now drawing lawsuits, congressional criticism, and skeptical voters ahead of the 2026 midterms.

An Intel shareholder lawsuit is challenging the legal basis for one of the administration’s largest stakes, while polling shows most Americans oppose the arrangements . The government now holds a 10% stake in Intel and a 15% stake in MP Materials, both tied to CHIPS Act funding and the Defense Production Act .

The administration has executed roughly 30 equity and quasi-equity transactions that convert federal grants and loan authorities into direct ownership stakes since early 2025 . Commerce Secretary Howard Lutnick has framed these as “strategic investments” that will “enhance our country’s domestic capabilities” and let taxpayers “share in the upside.”

But the legal footing behind that role is now being tested in court. And the politics are getting complicated.

The Legal Challenge: An Intel Shareholder Lawsuit

The Intel shareholder lawsuit is challenging the legitimacy of the government’s equity demands tied to CHIPS Act funding. Plaintiffs argue the legal basis for those claims is shaky, and if upheld, that argument could unwind some of the administration’s most prominent deals .

The legal framework for these transactions is drawing scrutiny. The CHIPS and Science Act of 2022 was originally designed to hand out grants to semiconductor manufacturers. But the Trump administration opposed the program’s conditions—including labor agreements, restrictions on stock buybacks, and investment commitments—and converted the remaining grants into equity instead.

Under the agreement with Intel, the US government received 433.3 million shares of common stock, representing a 9.9% stake in the company . This amounted to an $8.9 billion investment, funded partially by $5.7 billion in grants awarded but not yet paid under the CHIPS Act .

What’s being challenged: The lawsuit questions whether the administration had the legal authority to demand equity stakes rather than simply handing out the grants Congress authorized. If the court agrees, it could force the government to unwind its stakes in Intel, MP Materials, and potentially other companies in the portfolio.

Treasury Secretary Scott Bessent has framed the approach as “creating assets for the American people rather than debt” . But the legal question is whether that’s actually permitted under the laws Congress passed.

Voters and Economists Turn Against the Policy

Public sentiment isn’t helping the administration’s case either. A July 2026 CNBC poll found that 49% of voters view government ownership stakes in US companies as inappropriate, while only 19% expressed support .

Economists are even more critical. A Kent Clark survey found that 67% of finance economists believe government equity stakes are detrimental to corporate performance. A larger share—82%—say the stakes harm governance practices .

Why they’re concerned: Economists worry about government interference in corporate decision-making, the distortion of market competition, and the conflicts of interest that arise when the government is simultaneously a shareholder, regulator, and customer.

As one analyst noted, “A company negotiating a contract with the Pentagon while the Pentagon holds a meaningful equity stake in that same company faces a conflict of interest with no clean resolution” .

The libertarian Cato Institute has been particularly vocal. Policy scholar Tad DeHaven argues that the administration’s policy is “a deliberate attempt to shape corporate behavior and obtain leverage under the guise of bolstering domestic capacity” .

Congressional Pushback

Congress isn’t unified on the policy, either. Rep. Pat Harrigan has flagged “unintended consequences” when the government takes equity positions in firms it also regulates and contracts with. Sen. Rick Scott has described government investment in private companies as a “last resort” rather than a feature of industrial policy .

A Government Accountability Office (GAO) report released in August 2026 found significant challenges in the CHIPS program’s execution. Commerce had canceled awards representing **$7.8 billion** of the $11 billion appropriated for semiconductor R&D, and the agency did not have a plan or timeline for fully meeting statutory requirements—specifically those related to the National Semiconductor Technology Center and the National Advanced Packaging Manufacturing Program.

What’s at stake: If Democrats retake Congress in the 2026 midterms, legislative pressure to unwind or restrict these equity arrangements becomes a real scenario. That introduces a category of political risk that most institutional investors are not accustomed to pricing into semiconductor or defense holdings .

Some institutional investors are beginning to treat government-linked equity as its own risk category, separate from standard regulatory exposure—shaped by election cycles and legislative calendars rather than earnings cycles and product roadmaps .

The Open AI Proposal and What Comes Next

The administration’s appetite for equity stakes may be expanding. OpenAI has reportedly proposed giving the government a 5% stake in the company worth roughly $42.6 billion. CEO Sam Altman has suggested a broader structure under which Washington would hold minority stakes in leading AI developers, including Anthropic, Google, and Meta, through a government vehicle .

Why this matters: If the proposal moves forward, the government’s tech portfolio would no longer be limited to chips and critical minerals—it would include a multibillion-dollar stake in the company at the center of the AI revolution.

Altman’s proposal is partly modeled on the Alaska Permanent Fund, which distributes returns from natural resource wealth to residents . Bernie Sanders has also introduced a proposal that would give the public a direct stake in large AI companies through a sovereign wealth fund, reflecting a bipartisan convergence around the idea of public equity in AI .

The Bigger Picture: A New Model Under Scrutiny

What’s emerging is a new model of American industrial policy—one where the government is not just funding research but actively investing in the companies that will shape the future.

The Trump administration’s National Economic Council director Kevin Hassett has indicated the government could take stakes in other companies after Intel, saying “I’m sure that at some point there’ll be more transactions” in the semiconductor industry or others .

But the model is facing real challenges:

1. The legal framework is shaky. The shareholder lawsuit challenging the Intel deal could unwind the entire portfolio if successful.

2. Public opinion is skeptical. Nearly half of voters oppose the practice, and economists are even more critical.

3. Political risk is growing. If Democrats retake Congress in 2026, legislative pressure to restrict these arrangements becomes a real possibility.

4. Conflicts of interest are unresolved. The government is simultaneously shareholder, regulator, and customer—a combination with no clean resolution.

5. Governance is a concern. 82% of economists believe government ownership harms governance practices.

The question isn’t whether this approach will expand—Kevin Hassett’s hints make that likely. The question is whether it can be sustained without distorting markets, creating conflicts of interest, or undermining public trust. And whether it survives the 2026 elections and the legal challenges that are already mounting.