The Senate just passed an amended version of President Donald Trump's "One Big Beautiful Bill Act" (OBBBA) in a dramatic 51 to 50 vote early Tuesday morning, with Vice President JD Vance casting the tie-breaking vote. While the amended bill must still return to the House for approval -- and faces strong opposition from Elon Musk and concerns about adding $3.3 trillion to the national debt -- clear winners are being created by the $150 billion military spending boost, $46.5 billion for border infrastructure, and targeted tax cuts.
Here are three blue chip stocks I'm buying as this proposed legislation moves on to the next steps.
Image source: Getty Images.
Defense contractors win big with military windfall
Lockheed Martin (LMT 0.12%) emerges as an obvious beneficiary of the bill's $150 billion military spending increase -- the largest peacetime defense boost in decades. Yes, the company spooked investors with $2 billion in classified program losses and F-35 technology delays earlier this year, but that's precisely why the stock offers an opportunity at 14.5 times 2027 projected earnings, well below historical multiples.
NYSE: LMT
Key Data Points
The defense-giant's competitive moat remains unassailable. Lockheed's $176 billion backlog already demonstrates insatiable global demand for its advanced systems, from the F-35 fighter jet to hypersonic weapons programs. The company generated $71 billion in revenue in 2024 with an impressive 9.8% operating margin, even while absorbing major program losses. With conflicts in Ukraine and the Middle East driving international orders, this domestic-spending surge arrives at the perfect moment.
Customer validation speaks volumes. Despite trade tensions, Canada has so far maintained its $19 billion order for 88 F-35 jets. Moreover, first-quarter 2025 earnings crushed expectations at $7.28 per share, versus estimates of $6.34, proving the business can navigate headwinds while positioned for windfall profits from increased Pentagon budgets.
With defense budgets set to explode, Lockheed's valuation discount won't last. That's why I'm buying this stock now.
Amazon benefits from consumer tax breaks
The bill's tax breaks on tips (up to $25,000) and overtime pay (up to $12,500) might seem disconnected from Amazon.com (AMZN +1.93%), but they directly boost discretionary spending for millions of service and hourly workers -- Amazon's core customer base. Combined with extended 2017 tax cuts and increased child tax credits, these provisions inject billions into consumers' wallets.
NASDAQ: AMZN
Key Data Points
Amazon's competitive advantages multiply these tailwinds. The company's 19% advertising revenue growth to $13.9 billion in Q1 2025 demonstrates pricing power that rivals can't match. More importantly, Amazon Web Services (AWS) generated $29.3 billion in quarterly revenue with massive margins, providing the cash flow to dominate retail through any economic cycle. CEO Andy Jassy confirmed the company hasn't seen "attenuation of demand," despite tariff concerns.
The e-commerce giant's moat deepens daily. Prime's subscription lock-in, the irreplaceable logistics network, and AWS' stranglehold on cloud infrastructure create compounding advantages. Third-party sellers generate over half of retail sales, creating network effects that competitors can't replicate. As discretionary spending surges from tax cuts, Amazon captures an outsized share.
Trading at 25 times 2027 projected earnings, Amazon appears expensive until you consider that analysts project revenue growing from $665 billion in 2025 to over $1 trillion by 2030. Tax cuts accelerating that timeline make current valuations look reasonable.
Amazon also provides exposure to ultra-high-growth quantum computing and advanced robotics markets. It's a no-brainer buy right now with a significant boost to consumer discretionary spending coming.
Caterpillar digs into infrastructure bonanza
Caterpillar (CAT +0.83%) stands as the purest play on the bill's $46.5 billion border-wall allocation, plus $10 billion for broader border security. Every mile of wall construction requires Caterpillar's bulldozers, excavators, and specialized equipment. Despite disappointing Q1 2025 results, with revenue down 10% to $14.2 billion, the company maintained 18.3% operating margins -- proving pricing power that will amplify profits when volumes recover.
NYSE: CAT
Key Data Points
Caterpillar's competitive positioning is unmatched. Its global dealer network spanning 192 countries creates barriers rivals can't overcome.
Construction companies are dependent on the company's equipment for parts availability and service support, generating switching costs that protect market share. The company returned over $4 billion to shareholders through dividends and buybacks during the first quarter despite turbulence, demonstrating its financial fortress status.
Management's execution shines through adversity. Generating $1.3 billion in operating cash flow in Q1 2025, while navigating dealer inventory corrections, positions Caterpillar perfectly for the infrastructure surge ahead. Border construction represents just the beginning -- the ripple effects through construction supply chains will drive demand for years.
At 16.5 times projected 2027 earnings, Caterpillar offers a reasonable valuation for a company about to enter a government-funded supercycle. Wall Street's $379 average price target sits below today's price (around $390 at this writing), but that's because analysts haven't factored in guaranteed multiyear border-construction demand.
The contrarian opportunity
Markets hate uncertainty, and this bill delivers it in spades -- from Medicaid cuts affecting 11.8 million Americans to adding trillions in debt. But that's exactly why these three stocks offer opportunity.
Each benefits directly from the bill's core provisions, while trading at reasonable valuations due to near-term concerns. Patient investors willing to look past the headlines to the fundamental business impacts should be rewarded as this spending flows through to corporate earnings over the next several years.
