- The US government has seen the value of its Intel stake surge by about $27 billion on paper.
- The chip stock hit a record on Friday, surging 28% after strong Q1 earnings and guidance.
- The swelling value of the Intel stake is a boon for Trump's brand of state-led capitalism.
Intel's latest stock rally has been a boon for one big investor: the US government.
The Trump administration and Intel announced last August that the government had taken a nearly 10% stake in the chip maker. The government has seen the value of its investment—a purchase of 433.3 million shares initially valued at $8.9 billion—increase by about $27 billion on paper to $36 billion following Friday's big rally.
The company's first-quarter earnings beat and strong guidance for the current quarter sparked a gain of as much as 28% to an all-time high of $85.22. The stock closed at $82.57.
As part of its investment, the government also received warrants that give it the right to purchase an additional 5% of the common stock at $20 per share.
Intel shares are up 118% year-to-date, and have rallied nearly 250% since the White House announced its investment last summer.
It is a staggering mark-to-market gain for the federal government. It is also a success story for Donald Trump's administration, which has made a handful of investments in public companies it has deemed critical to national security, such as tech and rare earth materials.
Trump's brand of state-led capitalism has also seen the White House take a heavier hand in guiding corporate activities, such as stock buybacks and executive pay. Most recently, the administration is reportedly in talks to provide a loan to rescue struggling Spirit Airlines.
Michael Brown, a senior research strategist at Pepperstone, said he thinks the president was likely to publicly tout the success of Intel and the soaring value of the government's investment.
"We know how he loves to do a victory lap," Brown told Business Insider. "I'm actually slightly surprised we haven't already seen a post saying something along those lines."
The investment could also be used as a reason for the government to take stakes in other companies, Brown speculated. He raised concerns, though, that companies backed by the government could take on more risk than they otherwise would, knowing they have the president's support.
"The White House is encouraged by the tremendous progress that continues to be made on the reshoring and revitalization of American semiconductor manufacturing. This is a top priority for President Trump, and the promising results that our domestic semiconductor industry is reporting are a direct result of the Administration's nimble and multifaceted policy approach," a spokesperson for the White House told Business Insider in an email about Intel's latest results.
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