In light of some unusual deals President Donald Trump has signed off on between the federal government and technology companies, it is time for investors to consider whether we are at the start of a significant trend that could help boost stocks.
Analysts at Jefferies prepared two lists of companies that might be subject to further "state interventions" by the Trump administration. Together, the lists include 65 companies, and we have screened them below for a smaller list.
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You might have been surprised on Aug. 22 when Intel Corp. INTC announced an agreement through which the federal government would take a 9.9% stake in the company in return for $8.9 billion in funding. That would include money authorized under the CHIPS and Science Act, which President Joe Biden signed into law in 2022, and additional funds through an agreement with the Commerce Department. Under the agreement, the federal government would also receive warrants to purchase an additional 5% in Intel's stock, which expire in five years.
The Intel deal followed a report in the Financial Times earlier in August that Nvidia Corp. NVDA and Advanced Micro Devices Inc. AMD had agreed to pay the federal government 15% of their revenues in China from the sale of graphics processing units under newly required export licenses.
Reaction to Trump's recent technology deals:
Companies already receiving a lot of federal money
The Jefferies analysts, led by Aniket Shah, who heads the firm's sustainability and transition strategy team, published a research report for clients on Tuesday, "Who Might Be the Next Targets for the U.S. State Capitalism?"
Shah cited three broad factors that could lead to companies being subject to federal intervention:
The Jefferies team listed public companies with at least $500 million in "federal awards" with the most recent funding taking place within the federal government's fiscal 2025. In a separate list, the Jefferies analysts listed "major" recipients of grants under the CHIPS Act.
To screen this combined group of 65 companies, we focused on projected revenue-growth rates based on consensus estimates among analysts working for brokerage or research firms polled by FactSet. We also pared the list to companies with market capitalizations of at least $1 billion and majority "buy" or equivalent ratings among the analysts polled by FactSet.