President Trump’s address to Congress last night contained few true surprises over a sprawling 99-minute runtime.
He reasserted his electoral mandate after highlighting Republicans’ across-the-board wins.
He doubled down on tariffs, promising reciprocal tariffs should the U.S. face retaliatory tariffs from any of its trading partners.
He promised tax cuts for all Americans, including no taxes on overtime, tips, or Social Security.
And he ran through a laundry list of “woke” programs cut by DOGE, ostensibly translating to millions of dollars saved.
What was unexpected, however, was the announcement of a new “Office of Shipbuilding” intended to onshore more of the shipbuilding industry—an industry that’s been dominated by China, which has seen its share of manufacturing swell to 50% in 2023 from only 5% in 2000.
U.S. shipbuilders, however, have seen their share of the $150 billion industry fall below 1%.
While the manner in which the federal government intends to bolster the country’s standing in the shipbuilding space is as of yet unclear, it’s safe to assume that it will be done in close collaboration with the private sector.
To wit, President Trump’s efforts to reclaim the Panama Canal have been “achieved” via a private transaction that sees BlackRock acquiring a 90% stake of the Panama Ports Company from CK Hutchinson.
Similarly, the $500 billion investment under “Stargate”—the AI initiative—comprises private investments simply taking place under the umbrella of his leadership.
So it stands to reason that the private sector will do most of the heavy lifting (with a possible financial assist from taxpayers) and will reap the rewards.
With that in mind, let’s take a look at some stocks that are most likely to benefit from a renewed focus on the industry.
2 Shipbuilding Stocks Likely to Benefit from an Industry Revival
Huntington Ingalls Industries (HII)
HII (their preferred nomenclature) is “a global, all-domain defense provider. HII’s mission is to deliver the world’s most powerful ships and all-domain solutions in service of the nation, creating the advantage for our customers to protect peace and freedom around the world.
“As the nation’s largest military shipbuilder, and with a more than 135-year history of advancing U.S. national security, HII delivers critical capabilities extending from ships to unmanned systems, cyber, ISR, AI/ML and synthetic training. Headquartered in Virginia, HII’s workforce is 44,000 strong.”
As you can see in the chart above, shares immediately rose 11% on the morning after the address, as the firm is the most clear-cut beneficiary of any coming shipbuilding growth in the U.S.
The company is already highly dependent on government contracts and expects to secure an additional $50 billion worth over the next 24 months, which does not include additional contracts due to the Office of Shipbuilding announcement.
Even with the 11% bounce, shares are down 34% in the last year and are not showing much in the way of technical strength.
General Dynamics (GD)
While less reliant on shipbuilding, General Dynamics is another name worth watching. The company “offers a broad portfolio of innovative products and services in business aviation; combat vehicles, weapons systems and munitions; IT and C4ISR solutions; and shipbuilding and ship repair… From Gulfstream business jets and combat vehicles to nuclear-powered submarines and communications systems.”
General Dynamics’ Marine Systems business unit generated $14.3 billion in revenue in 2024 (30% of the company’s total $47.7 billion revenue for the year), meaning the company has much less shipbuilding exposure compared to HII.
As a result, shares moved higher by a more mundane 4% after Trump’s address.
Given President Trump’s emphasis on American companies and domestic production, HII and GD are the most likely beneficiaries of a growing focus on shipbuilding.
Of course, the scale of that benefit will be somewhat dependent on what, if any, additional federal spending comes down the pike. In an environment in which spending cuts are a priority, it’s hard to imagine a blank check for shipbuilders as a means to buoy the industry.
Should the government open its pocketbook, however, these companies are probably first in line for handouts.
BAE Systems (BAESY)
Lastly, as an also-ran that did not make the top two due to its British pedigree, I wanted to highlight another company in the space that’s thriving for entirely different reasons.
BAE Systems is the largest manufacturer in Britain and the largest defense contractor in Europe. The company’s segments include Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence, with the Maritime segment representing 22% of the company’s 2024 revenues (GBP 28.3 billion in total revenue; Maritime segment was GBP 6.2 billion; GBP 23 billion Maritime backlog).
The company also derives 44% of its revenues from the U.S. and could be a second-order winner, depending on how heavily prioritized U.S. companies are.
As you can see in the chart, shares have risen sharply this year, mostly on growth in European defense spending. But should that trend continue (and should BAE Systems continue to drum up business in the U.S.), BAESY may have two tailwinds at its back.
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