Trump backlash adds new risks to the stocks the government owns

August 29, 2026 · Fortune

Traders have made a bundle over the past year following President Donald Trump as the US government pursues an unprecedented strategy of taking ownership stakes in publicly traded companies.

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But with the deeply polarized midterm elections approaching and polls suggesting the Democratic Party is likely to win a majority in at least one house of Congress, market strategists see rising risks of the administration’s equity positions facing scrutiny in Washington and the courts. And that could reverse much of the momentum driving these stocks.

“There is a sort of interventionist approach that is not fully litigated and mediated in the American system yet,” said Matt Gertken, who leads geopolitical and US political analysis for BCA Research. “So there’s going to be ups and downs in that process.”

There’s no doubt that the government’s involvement has lifted the stock prices of many of the companies in which it has taken stakes. The trend kicked off a rush among investors, particularly mom-and-pop traders, to identify potential investments before they were announced, as the correct pick all but guaranteed at least an initial surge and pointed to longer-term upside.

Intel Corp. shares have soared over 300% in the year since the initial report that the Trump administration was in talks to take an ownership stake in the chipmaker. MP Materials Corp. is up 87% since last July, when the Department of Defense made a $400 million equity investment in the rare earth minerals upstart. And Trilogy Metals Inc. has gained 73% since October, when the US government agreed to take a 10% stake in the Canadian minerals exploration company in a deal that included approval for an Alaska road project that was essential to accessing areas where it has mining claims.

However, those numbers have largely come in bursts. Trilogy Metals’ US shares jumped from $2.09 a share to a high of $10.60 within days of the deal announcement, then they quickly gave up those gains and are now trading for $3.62. MP Materials soared more than 150% within five weeks of the government taking a stake, but it’s down nearly 27% in the year since then.

Intel is a slightly different case because it’s also caught up in the mania for chip stocks as spending on artificial intelligence creates extreme demand for semiconductors. The stock rose steadily as earnings improved, peaking in June after Trump said Apple Inc. will work with the company to design and produce semiconductors in the US. But it’s down 37% since then, the fifth worst performance in the S&P 500 Index over that stretch.

Part of the skepticism surrounding Intel involves a shareholder lawsuit against the company’s board, the US Department of Commerce and Commerce Secretary Howard Lutnick, seeking to unwind the government’s ownership position. If it’s successful, investors will have to assess the durability of the administration’s entire portfolio.

“It is really the government investment that really turned it around, and it’s certainly what I think is a factor in keeping the stock where it is right now,” said Mark Malek, chief investment officer of Siebert Financial, which owns Intel shares. “If you pull that away, the question is then what happens? That is why we haven’t increased our investment at all.”

The more conventional concern about the stocks is the highly partisan environment in DC. If the Democrats gain control of the Senate or House of Representatives they can hold hearings and subpoena witnesses. Democratic Senator Elizabeth Warren, who’s in line to chair the Senate Banking Committee if the party wins the chamber, has already written Lutnick questioning the Intel investment. And party leaders are laying the groundwork to investigate companies with ties to the Trump administration and the president’s family.

The Democrats are “going to want to punch at the president as often as possible for as long as possible,” said Henrietta Treyz, co-founder of the research firm Veda Partners.

She expects Democratic-run committees to summon corporate executives and administration officials to Capitol Hill, creating risks for the companies’ brands and share prices. “That’s one of the most important takeaways for investors right now,” Treyz said.

Intel, Trilogy Metals and another investment recipient USA Rare Earth Inc. declined to comment. Trilogy cited the process of closing its deal with the government. The Commerce Department and other companies mentioned in this story did not respond to requests for comment.

The risks to investors from litigation may be even bigger than the elections. The Intel shareholder suit argues that the Chips Act doesn’t give the government authority to demand an equity position as a condition of receiving a grant. It alleges that the deal was a breach of the board’s fiduciary duties and amounts to an “extortionary” seizure.

Lutnick has asked the court to dismiss the case, saying that the arrangement was authorized under federal law and is important for the US defense industrial base. Intel Chief Executive Officer Lip-Bu Tan and other board members have also moved to dismiss the case.

“If the courts end up deciding that the Chips Act does not give the Commerce Department authority to do what they did with Intel, that has broad ramifications for a lot of these deals,” said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center.

Such a decision would call into question other equity investments made under the Chips Act, according to University of Colorado law professor Ann Lipton. The Commerce Department has used funding from the bill to invest in several other companies, including International Business Machines Corp. and GlobalFoundries Inc.

The Trump administration’s strategy has subverted the reason the government has typically gotten involved in private enterprise, and with it Wall Street’s reaction to the moves. In the past, these deals were rare and usually done to rescue companies, as was the case with General Motors Co., which was forced into bankruptcy during the global financial crisis.

In 2009, the US Treasury Department took a roughly 60% stake in the troubled automaker to help it emerge from Chapter 11, and by 2013 had sold all of it. The Bush and Obama administrations were heavily criticized by Republicans for the bailout, spurring on the nascent Tea Party movement with complaints of government overreach into the free market.

Now, the state is essentially picking winners, not rescuing big US companies that are deemed critical to the economy. The stock gains reflect the view “that you now have a customer and a spokesperson in the government that is going to make your company successful,” said Aniket Shah, global head of Washington, sustainability, and transition strategy at Jefferies.

Of course, the ultimate risk for owning these stocks is familiar to all investors, namely the vagaries of the market itself. If the government gains control over businesses’ decisions and investment dollars chase political trends, that will erode shareholder value over the long term, according to Gina Martin Adams, chief market strategist at HB Wealth Management.

“The risks of government ‘backing’ have always been there,” she said in a text message. “It may have positively influenced stock prices, but that is likely due (at least in part) to investors chasing politics, and that makes the stock price momentum quite vulnerable.”

This story was originally featured on Fortune.com

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