The U.S. government transforms into a "sovereign wealth fund" and has invested in 26 companies, spanning rare earths, semiconductors, quantum computing, nuclear energy... Who will be the next to buy?

Since January 2025, the U.S. government has quietly become a shareholder in 26 companies across nine major sectors—rare earths, semiconductors, quantum computing, nuclear energy, steel, and more—using three tools: direct equity investment, traditional grants and loans, and offtake agreements.
(Background: Vance supports the U.S. government taking stakes in AI giants like OpenAI and Anthropic; Musk disagrees: better to just hand out cash, and we must fight deflation in the future)
(Context: Buying peace? OpenAI proposes donating 5% equity to a U.S. sovereign wealth fund; a senator ups the ante, calling for a "50% AI tax")
Table of Contents

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• Three Arrows: From Issuing Subsidies to Becoming a Shareholder Directly
• Funding Spigot: DFC's Lending Cap Surges to $205 Billion
• Behind the Halo
• Next Targets: Robotics, Drones, Shipbuilding

Last July, shares of NYSE-listed rare earth miner MP Materials doubled in value, the catalyst being a government announcement: the U.S. Department of Defense invested $400 million to purchase preferred shares, acquiring a 15% stake in the company, becoming its largest shareholder, and signing a long-term contract to purchase the entire output of its plant.

This is a microcosm of a systematic approach: according to official records compiled, since January 2025, Washington's role has rapidly shifted from "grant issuer" to "equity-holding shareholder," spanning industries such as rare earths, semiconductors, quantum computing, nuclear energy, and steel. Analyst Moe On Margin gave an apt conclusion: "Washington is operating like a sovereign wealth fund—it just hasn't announced it yet."

Three Arrows: From Issuing Subsidies to Becoming a Shareholder Directly

These transactions are not traditional government subsidies; they are built on a combination of three tools.

First, direct equity. Through preferred shares, common shares, or warrants, the nature of this involvement is completely different from the bank bailouts after the 2008 financial crisis.

Second, traditional grants and loans, continuing the existing industrial policy toolkit.

Third—the least discussed yet most powerful—offtake agreements and price floors, where the government commits to buying specific products at a guaranteed minimum price. MP Materials' 10-year NdPr rare earth price floor ($110 per kilogram) is a prime example.

Together, these three roles mean the government simultaneously acts as co-holder, co-investor, and guaranteed buyer. Private capital has followed: JPMorgan Chase and Goldman Sachs together have added $4.75 billion in co-investment, and the UAE sovereign fund ADQ has participated in some mining deals.

Funding Spigot: DFC's Lending Cap Surges to $205 Billion

The financial engine behind this mechanism is the U.S. International Development Finance Corporation (DFC).

Originally, under the BUILD Act, the DFC's lending cap was only $60 billion. In December 2025, Congress passed the DFC Modernization and Reauthorization Act, which raised the cap to $205 billion and extended the DFC's authority to domestic investments under the Defense Production Act. Additionally, a new $5 billion equity revolving fund was established at the Treasury Department.

So far, the DFC has executed three equity transactions, involving critical minerals, healthcare, and infrastructure—the terms of the latter two have not yet been disclosed. Looking at the full picture, since this mechanism was launched in January 2025, the list of equity investments has reached 26 companies across nine major sectors, with cumulative investment of $23.9 billion. Compared to the statutory cap of $205 billion, that leaves a massive $181 billion war chest, already authorized by Congress and ready to be deployed at any time.

Behind the Halo

It must be noted that many of these "government concept stocks" have already surged on news, and the positive factors may be partially reflected in share prices: on the day of the "quantum nine news feed," D-Wave soared 33% and Rigetti rose 30%; the drone stocks mentioned later also spiked over 50% on a single news day.

Second, some transactions are still at the letter of intent stage and have not been finalized. The agreements between xLight and nine quantum companies are currently at the LOI stage; the two DFC transactions in healthcare and infrastructure have undisclosed amounts and terms.

But a more fundamental controversy lies in the very idea of "government as shareholder." Critics, including Musk, argue that instead of the government taking stakes in specific companies, resources should be distributed directly to the people. The legitimacy of this industrial policy direction is not without internal dissent in Washington.

Next Targets: Robotics, Drones, Shipbuilding

Analyst Moe On Margin believes that robotics and advanced manufacturing are the next sectors that have not yet closed deals but are already on the agenda. Commerce Secretary Lutnick has met with CEOs of several robotics companies, and the market expects a dedicated executive order this year.

Drones are also generating high interest: the FY2027 military drone budget exceeds $70 billion. The Pentagon's Strategic Capital Office is in talks with companies such as Performance Drone Works, Unusual Machines, and Neros Technologies for equity and debt cooperation, aiming to bring the cost of each attack drone down to around $5,000.

Shipbuilding has a clear legislative path: the FY2027 naval shipbuilding budget is $65.8 billion, plus the SHIPS Act and the Maritime Security Trust Fund. Executive Order 14372 requires defense contractors to retain cash, suspend dividends, and prioritize reinvestment in production capacity. Critical minerals will also enter a second phase, including the Project Vault strategic reserve, the addition of copper and metallurgical coal, and a sovereign risk insurance fund, with the UAE's ADQ continuing to participate.

Looking toward 2028, several milestones are worth tracking: USA Rare Earth's heavy rare earth production capacity, MP Materials' end-to-end capability from mining to magnets, Intel's 18A process yield performance, and whether xLight's first silicon wafer can debut as scheduled.

(Moe On Margin discloses holdings in MP Materials, USA Rare Earth, Lithium Americas, Intel, and other companies in this article. This is a summary of personal views and does not constitute investment advice.)