How To Profit From Trump's 'Golden Dome'
The Stocks To Buy
It feels like we’ve been here before. In the 1980s, with the Cold War at its iciest, Ronald Reagan unveiled his Strategic Defence Initiative, a fantastically ambitious plan to build a shield in space to render nuclear missiles obsolete. His critics, and there were many, derisively nicknamed it 'Star Wars'. Now, some forty years later, in a world once again defined by great power competition, Donald Trump has announced his own version: the 'Golden Dome for America'. This is not merely a defence programme; it is a declaration of a new strategic and industrial policy, a Reagan-esque vision for a second term that promises to reshape the American defence landscape.
For investors, this is far more than just political theatre. This is the resurrection of an economic theory known as Military Keynesianism, the idea that massive government spending on defence can act as a powerful fiscal stimulus, boosting economic growth across the board. And the spending is indeed massive. The plan kicks off with an initial funding injection of £20 billion ($25 billion), with a total projected cost ballooning to at least £140 billion ($175 billion), and likely far more when the final sums are tallied. Aerospace giant Lockheed Martin, never one for understatement, has already labelled it a "Manhattan Project-scale mission," a turn of phrase that should make any investor sit up and take notice.
What makes this opportunity particularly compelling is the political force behind it. This is not some vague, long-term aspiration buried deep within the Pentagon's bureaucracy. It is a personal priority for Donald Trump, who has demanded it be operational before the end of his term. To that end, a Direct Reporting Program Manager, General Mike Guetlein, has already been appointed, reporting straight to the top of the Defence Department. This direct line of command is designed to slice through red tape and funding squabbles. For those of us placing capital, this political will translates into a much higher degree of certainty that the promised funds will actually flow, significantly de-risking the investment thesis compared to other government programmes that can languish for years.
What Exactly is the Golden Dome?
Before we can assess the winners, we must understand the game. The Golden Dome is not a single piece of technology but a "system of systems," a multi-layered shield designed to counter everything from traditional ballistic missiles to the new generation of hypersonic weapons being developed by China and Russia.
The first layer is foundational, relying on the expansion and integration of existing, proven technologies. This means more ground-based interceptors, more naval ships equipped with the Aegis Combat System, and more mobile units like the Terminal High Altitude Area Defense (THAAD) and Patriot missile batteries. This is the low-risk, high-volume part of the programme, leveraging established production lines.
The second layer is the all-seeing eye in space. This involves deploying a new constellation of advanced satellites specifically designed for warning and tracking. Their primary mission is to detect threats that can evade traditional radar, such as hypersonic glide vehicles and even theoretical Fractional Orbital Bombardment Systems (FOBS).
The third and most ambitious layer is pure 'Star Wars': space-based interceptors. This is the truly revolutionary and controversial component, involving weapons stationed in orbit that can strike down enemy missiles during their initial boost phase, when they are at their most vulnerable. This is where the bulk of the research and development spending, and the highest profit margins, will likely be found.
It is important to note that whilst the ambition is monumental, the programme is, in the words of the Air Force Secretary, still "in the conceptual stage". Formal contracts have not yet been awarded. This is precisely why the opportunity is so potent. The market has not yet priced in the contract wins, giving astute investors a window to position themselves ahead of the curve. The recent news that Canada is in talks to join the programme only widens its potential scope and the pool of money available.
Assessing the Defence Titans
The battle to build the Golden Dome will be fought between the titans of the American defence industry. Three companies stand above the rest as the prime contenders for the largest contracts.
Lockheed Martin (LMT)
On paper, Lockheed Martin looks like the unassailable favourite. It is a veritable one-stop shop for the foundational layer of the Dome. It builds the THAAD system, the naval Aegis Combat System, the PAC-3 missiles, and, most critically, the Command and Control, Battle Management, and Communications (C2BMC) software that acts as the brain for America's existing missile defences. The company’s own marketing materials are already plastered with "Golden Dome" branding, signalling its aggressive pursuit of the contracts.
However, this titan is stumbling. The company’s second-quarter 2025 earnings report was nothing short of a disaster. It posted a shocking 78% earnings per share miss against forecasts, with revenues also falling short of expectations. The culprit was a staggering $1.6 billion in pre-tax losses, primarily from a secretive classified programme in its Aeronautics division and its long-troubled Canadian Maritime Helicopter Programme. The market reacted with predictable horror, sending the stock plummeting.
For a value-oriented investor, this presents a potential opportunity. The stock now trades at a price-to-earnings (P/E) ratio in the high teens to low twenties, depending on the day, which is broadly in line with or slightly above its ten-year average of around 20. The question is whether this discount is sufficient. The company’s underlying business remains robust, with a formidable backlog of $167 billion and a maintained sales forecast for the full year, suggesting stability.
Yet, the recent performance raises a deeper, more troubling question. The charges were taken on complex, long-running programmes, and the company continues to face delays on its flagship F-35 fighter jet. This suggests a pattern of execution risk. Has Lockheed become too large and complex to manage its own portfolio effectively? Can it truly take on another "Manhattan Project-scale" mission without fumbling its existing multi-billion-dollar commitments? The risk here is not just financial, but operational.
Northrop Grumman (NOC)
Where Lockheed shows weakness, Northrop Grumman radiates strength. This is a company that has positioned itself as the leader for the next generation of warfare. It is the prime contractor for both the new B-21 Raider stealth bomber and the Sentinel intercontinental ballistic missile, the two programmes that will define American strategic power for the next half-century. Its portfolio is perfectly aligned with the most advanced layers of the Golden Dome, from next-generation space sensors to command and control systems.
The key differentiator, however, is a stunning admission from CEO Kathy Warden. On a recent earnings call, she confirmed that Northrop Grumman is already on the ground testing components for the space-based interceptors. This is not a theoretical capability; it is a tangible step towards capturing what will be the most technologically demanding and lucrative part of the entire programme.
This operational momentum is reflected in its financials. In stark contrast to Lockheed, Northrop’s second-quarter 2025 results were a resounding success. It beat earnings per share forecasts by nearly 20%, surpassed revenue expectations, and raised its full-year guidance. This is a company executing flawlessly. Its valuation, with a P/E ratio around 20-21 and a price-to-sales (P/S) of 2.0, is not cheap, but it reflects a company at the top of its game. This performance builds on its previous successes. By winning the contracts for the B-21 and Sentinel, Northrop has built immense institutional trust within the Pentagon. When the government looks for a partner for its next great technological challenge, the company that is already delivering on the current ones has a powerful advantage. This momentum suggests Northrop is the clear front-runner for the most advanced elements of the Dome.
RTX Corporation (RTX)
RTX, the parent of Raytheon, represents the safest pair of hands in this contest. It is the indispensable supplier, the "picks and shovels" play on the Golden Dome gold rush. While it may not win the overall prime contract, its technology will be essential to whoever does. RTX dominates the market for the systems that make missile defence possible: advanced radars like the Navy's SPY-6 and the Army's LTAMDS, and combat-proven interceptors like the Standard Missile family and the Patriot system.
Crucially, RTX has unparalleled real-world experience, having partnered with Israel on its Iron Dome and David's Sling systems, the very concepts that inspired Trump's plan. Its financial position is rock-solid. Q2 2025 saw sales grow a healthy 9%, and the company sits on a colossal backlog of $236 billion, of which $92 billion is in defence, providing incredible revenue stability. Its P/E ratio of around 32 may seem high, but this reflects its powerful blend of a recovering commercial aerospace business and its robust, growing defence segment. For a lower-risk investor, RTX is the foundational building block of any Golden Dome portfolio.
The Under-the-Radar Plays
Whilst the titans battle for the main contracts, there are more subtle ways to play this theme. The Golden Dome is a "system of systems," and such a system is utterly useless without a secure, resilient, and intelligent network to connect every sensor to every shooter. This is the programme's nervous system, and a company called Viasat (VSAT) is a specialist in building it.
Viasat is a global leader in secure satellite communications for government and defence clients, a position cemented by its recent acquisition of Inmarsat. The most compelling evidence of its potential, however, is a recent contract win that went largely unnoticed. Viasat was selected by the Pentagon's Defense Innovation Unit (DIU) to prototype technology for its Hybrid Space Architecture (HSA) project. The goal of the HSA, to integrate civil, commercial, and military space assets into a single, unified network, is a mirror image of what the Golden Dome requires. This contract puts Viasat at the very heart of the Pentagon's thinking.
This opportunity is not without risk. Viasat has a challenging financial profile, with a negative P/E ratio and a complex balance sheet following the Inmarsat deal. Yet, there are signs of a turnaround. Its defence segment boasts a healthy book-to-bill ratio of 1.2x, and the company is on a path to generating positive free cash flow. This makes Viasat a high-risk, high-reward "hidden gem." A significant contract for the Golden Dome could be transformative for the company, as it would entrench its networking technology at the core of the US military's entire operating philosophy for decades to come. This is because the Golden Dome is not just a missile shield; it is effectively the flagship implementation of the Pentagon's overarching Joint All-Domain Command and Control (JADC2) strategy, which seeks to link all military assets into one network.
As for the headline-grabbing spat between Donald Trump and Elon Musk, its primary investment implication is that it makes the established primes a safer bet. The Pentagon prizes reliability above all else. The public drama makes SpaceX a less predictable partner, strengthening the hand of companies like Lockheed Martin and Northrop Grumman, which have spent decades cultivating deep, stable relationships with their main customer.
The Final Verdict:
Weighing the evidence, a clear picture emerges. Lockheed Martin is the incumbent giant, perfectly positioned for the foundational work of the Dome and now trading at a discount. It is a classic value play, but one clouded by significant execution risk. RTX is the safest pair of hands, an essential supplier with a colossal backlog that offers stability and a solid, if perhaps less explosive, way to play the theme.
However, the most compelling opportunity lies with Northrop Grumman (NOC). This is the momentum play. It is a company firing on all cylinders, with flawless execution, strong financials, and a strategy that is directly aligned with the most innovative and profitable space-based elements of the Golden Dome. Its proven ability to deliver on the nation's most complex defence programmes makes it the clear front-runner. While its valuation is not the cheapest, the quality of the business and its clear growth trajectory justify the price.
For those with a higher tolerance for risk, a smaller, more speculative position in Viasat (VSAT) offers a contrarian angle. As the potential provider of the programme's essential nervous system, a significant contract win could offer asymmetric upside. In the great game of forging the Golden Dome, Northrop Grumman looks set to build the shield, but Viasat could be the one that makes it think.
Thank you for reading, and have a great day!