The U.S. government’s plan to take a direct equity stake in Intel (INTC) may sound like a powerful vote of confidence.
But it carries big dilution risks for shareholders and sets a precedent critics say could blur the line between private enterprise and government control.
Bernstein Research analyst Stacy Rasgon reaffirmed a market perform rating on Intel, signaling expectations that the stock will merely track the market. But he stressed that “the devil lies in the details.”
Rasgon set a $21 price target, roughly 15% below where Intel trades now. His main concern was dilution. Intel is issuing 522 million new shares, 433 million to the U.S. government at $20.47 (a 10% stake) and 87 million to SoftBank at $23.
Together, that dilutes current shareholders by about 11%.
While government backing may provide near-term support, Rasgon argues Intel’s structural challenges make it unattractive for long-term investors.
“Unconstitutional” precedent?
Last week, the Trump administration announced it would convert $8.9 billion in unused and reallocated grant funds into an equity stake, giving Washington direct ownership in the chipmaker.
Economist Peter Schiff blasted the move. “Trump wasn’t hired to run a hedge fund,” he wrote. “This is not only unconstitutional, but a very bad precedent. Had Biden done this, Republicans would be livid.”
The U.S. Govt. taking a 10% stake in $INTC is not only unconstitutional, it's a bad idea. Trump wasn't hired to run a hedge fund. This is a very bad precedent to set, as it moves our nation further away from free-market capitalism. Had Biden done this, Republicans would be livid.
undefined Peter Schiff (@PeterSchiff) August 22, 2025
Intel praised the deal in its official press release but acknowledged the risks in regulatory filings, from potential lawsuits to backlash from foreign governments.
With the government on its cap table, Intel warned it may face “additional regulations, obligations or restrictions, such as foreign subsidy laws,” according to a filing cited by the Washington Post.
Intel stock is up 22% year-to-date, compared to a 13% gain for the S&P 500 tech sector.
For shareholders, Washington’s stake is both a safety net and a shackle. Federal backing reinforces Intel’s role as a strategic national asset, but it also brings dilution, political baggage, and a future where government influence could weigh heavily on strategy.
As Schiff put it, “This isn’t capitalism. It’s something else entirely.”
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