President Donald Trump is remaking the U.S. Navy, and investors in America's biggest defense stocks may one day thank him for it.
No sooner had the Navy announced, last month, that it would cancel its ill-considered plan to have Italy's Fincantieri build it a fleet of Constellation-class frigates (already overpriced and behind schedule), than the president announced a U.S. defense company, Huntington Ingalls Industries (HII +2.78%), will build us a new frigate fleet based on a successful design already in use by the U.S. Coast Guard instead. Reports that the National Security Cutter will morph into a frigate design, adding billions of dollars to Huntington's revenue stream, sent the stock sharply higher. By the end of the year, Huntington Ingalls' stock had gained 82%.
And that may be only the beginning -- because the next ship the president wants built is a battleship.
Image source: U.S. Navy.
What's the opposite of "You sunk my battleship"?
Dubbed the Trump class, the new battleships are designed to be "the most lethal surface combatant ever constructed," according to a U.S. Navy press release. The first ship of the class will be christened USS Defiant and number BBG 1 -- indicating it will be battleship in size (that's the "BB"). In contrast to WWII-era battleships that sported multiple 16-inch guns, though, the Defiant will rely primarily on guided missiles (that's the "G") for its armament.
USS Defiant will "triple the size of an Arleigh Burke-class destroyer," between 840 and 880 feet in length, displacing more than 35,000 tons, and carrying a crew of up to 850 sailors. It will be fast, traveling at speeds of 30 knots and up. And Defiant will boast "superior firepower, larger missile magazines, and the capability to launch Conventional Prompt Strike hypersonic missiles and the Surface Launch Cruise Missile-Nuclear."
Specifications provided by the Navy indicate that the Defiant will carry 12 Conventional Prompt Strike hypersonic missiles (a weapon that does not yet exist), as well as an assortment of 128 air defense and cruise missiles housed in MK-41 vertical launching system cells. Secondary armament will include an electromagnetic railgun (which also doesn't yet exist), two high-powered laser cannons, and two 5-inch conventional cannons. Supplementing its defensive capabilities will be four smaller laser cannons, two anti-aircraft missile launchers, four 30mm cannons, and two counter-UAS weapons of unspecified type for defeating drone attacks.
(Trivia: The U.S. Navy appears never to have had a warship named "Defiant" before, but it does have one boat so named in its service today. Numbered YT-804, it's a... tugboat. And considerably less well-armed than the BBG 1.)
Who will build USS Defiant?
Just reviewing the wish list of weapons for Defiant is enough to tell you this will be a big ship -- and offer many opportunities for multiple defense contractors to contribute. Take the railgun, for example. The Navy discontinued research into railguns under the Biden administration in 2021. Up until that happened, though, two contractors, BAE Systems (BAES.Y +3.69%) and General Atomics, had taken the lead in experimental work on the system. They'll presumably be tapped to take up the task again for Defiant.
Laser cannon for offense and defense? Everyone who's anyone in defense has produced at least a few prototypes for the Pentagon in the past, from Boeing (BA +4.91%) to Northrop Grumman (NOC +2.71%) to RTX (RTX +1.89%). Laser guns are already in experimental use aboard multiple U.S. warships, moreover, and I expect those efforts to intensify now.
And then there's the really big-ticket item: the hull itself. America's two biggest builders of military warships are Huntington Ingalls and General Dynamics (GD +2.00%). Given that Huntington will now be building the frigate fleet, the current Pentagon policy of splitting warship construction contracts roughly 50-50 between them argues in favor of handing Defiant to GD. Or, in the interests of getting more hulls in the water as fast as possible, both companies could be awarded contracts to build multiple BBGs.
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Key Data Points
The upshot for investors
How much will it cost to build USS Defiant? How long will it take (and how quickly will contractors be able to start booking revenue and profits)?
Military analysts at the venerable Janes publication estimate the first Trump-class battleship will cost as much as [an] aircraft carrier," which suggests a price tag of perhaps $14 billion (which is what the first Ford-class carrier cost). More conservative estimates from think tank CSIS indicate a cost of $9 billion might be closer to the mark if the battleships are built at scale.
Either number could be in the ballpark. Both numbers would be great news for the defense contractors vying for a piece of the Defiant pie. I'd just add one word of warning for defense investors familiar with how these kinds of big-ticket programs tend to go: As CSIS points out, it will take "many years" to design Defiant, and many more to build. The first ship of the class probably won't float before the "early to mid-2030s." Should anything go wrong and costs spin out of control, that'll give the Department of Government Efficiency a lot of time to put USS Defiant in its gun sights -- and sink this program before the first battleship hits the water.
