Al Root

President Donald Trump announced his Golden Dome missile-defense shield for the U.S. on Tuesday. Defense stocks rallied early on Wednesday -- none more so than L3Harris Technologies.

There should be plenty of additional business for just about everyone. This is a big project.

"I promised the American people that I would build a cutting-edge missile-defense shield to protect our homeland from the threat of foreign missile attack, and that's what we're doing," said Trump from the Oval Office with several in attendance, including Defense Secretary Pete Hegseth. "Once constructed, the Golden Dome will be capable of intercepting missiles, even if they launched from the other side of the world and [space]."

Hypersonic, ballistic, and cruise missiles can all be targeted and "knocked out of the air," added the president, who cited President Reagan's Star Wars initiative from the 1980s. Technology has caught up to that vision, and Trump plans to move fast. He wants the dome operational by the end of his term. The projected cost is only $175 billion, which looks "suspiciously low," according to Vertical Research Partners analyst Rob Stallard.

Israel has been spending hundreds of millions of dollars a year on its Iron Dome missile defense shield for more than a decade, with the U.S. contributing some $3 billion to the effort over the years. The U.S. is more than 300 times as large as Israel, so the costs, theoretically, would scale into the trillions of dollars. That's only very rough math. Golden Dome spending would be stretched over many years, and it would likely be operational before it offered full continental coverage.

The Congressional Budget Office has scored the cost of some iterations of the Dome at $500 billion to $900 billion. Details in the Trump announcement were thin, though. "Absent were [items such as] the number of radars, counter-UAS, satellites, ground installations, and interceptors in the architecture he selected," wrote Capital Alpha Partners analyst Byron Callan on Wednesday, adding the $175 billion might cover spending for about three years. "The full [details] of Golden Dome may have to wait until the Fiscal year 2027 budget...is made public in early 2026."

Higher costs, however, won't hurt the defense sector.

No companies were called out specifically by the president, but "across-the-board contractor involvement" is expected, wrote Jefferies analyst Sheila Kahyaoglu on Tuesday. "The press conference made reference to a lot of American companies being involved, [including] "Silicon Valley" and defense tech start-ups."

Silicon Valley and start-ups likely include Anduril, a leader in autonomous and artificial-intelligence-trained defense technology. Anduril isn't publicly traded; shares of the large defense prime contractors are moving on Wednesday morning.

J.P. Morgan analyst Seth Seifman noted that L3Harris was mentioned by Sen. Jim Banks (R., Ind.) at the event. That seems to be helping. L3Harris shares traded as high as $241.70 and were up 0.9% at $232.84 in midday trading, while the S&P 500 and Dow Jones Industrial Average were down 1% and 1.5%, respectively.

Shares of Lockheed Martin opened higher, but then slid into the red for a loss of 0.8%. That was the pattern for most defense stocks. Northrop Grumman and General Dynamics were off 0.4% and 1.3%, respectively, while RTX was up for more early but slipped to $135.95, down 0.9%. RTX might have got a bigger bump because of its history in missile defense; the company makes Patriot missiles.

From the Nov. 5 election through Tuesday's close, shares of those five contractors are down an average of 2%, while the S&P 500 has gained about 3%. Lockheed shares have been the weakest, down 13%. Only shares of RTX, which also benefits from a strong commercial aerospace business, were up, with a gain of 15%.

Investors have been worried that a focus on deficit reduction could pressure military spending. Still, Trump's initial budget request, unveiled in May, which included $25 billion for the Golden Dome, topped $1 trillion, reassuring investors that he is serious about peace through strength.

Write to Al Root at allen.root@dowjones.com

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May 21, 2025 14:46 ET (18:46 GMT)

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