Given President Trump’s emphasis on government cuts (e.g., regulations, taxes, government programs) it was something of a surprise in early March when he proposed a new “Office of Shipbuilding” in his address to Congress.
Although, upon further consideration, perhaps it shouldn’t have been.
The shipbuilding industry is utterly dominated by China, a country that is a perpetual foil for the president.
China’s share of manufacturing in that industry has skyrocketed from only 5% in 2000 to 50% in 2023 while U.S. shipbuilders have seen their share of the $150 billion industry wither to a paltry 1%.
Also, President Trump has promised to revive a variety of American industries such as energy, natural resources and manufacturing.
So, perhaps, dusting the mothballs off an industry that has seemingly fallen by the wayside may not be the stretch it seemed at first blush.
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 Hutchison.
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; tax incentives were mentioned in the address) 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 domestic shipbuilding.
2 Shipbuilding Stocks Poised to Outperform
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 rose 12.4% on the day 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 immediate 12.4% bounce (and the subsequent 7.7% gain since), shares are down 28.2% in the last year.
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.
