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Trump Eyes Stakes in Defense Contractors: Who's Next After Intel?

Just days after the U.S. government acquired a 10% stake in Intel for approximately $9 billion, Commerce Secretary Lutnick appeared on CNBC's "Squawk Box" and stated that top Pentagon officials are considering whether the United States should take equity positions in leading defense contractors, particularly those with significant government business like $Lockheed Martin(LMT)$  , $Boeing(BA)$  , or data analytics firm $Palantir Technologies Inc.(PLTR)$  .

He specifically highlighted $Lockheed Martin (LMT.US)$, noting that the majority of its revenue comes from the U.S. government, making it essentially indistinguishable from a government agency. This has sparked market speculation about who might be the next Intel, and how institutions are viewing the potential implications.

Who Could Be the Next Intel?

I have compiled a list of select U.S.-listed defense stocks, including AI and military specialist $Palantir (PLTR.US)$ , aerospace and defense giant $RTX Corp (RTX.US)$ , aviation manufacturing leader $Boeing (BA.US)$ , defense powerhouse $Lockheed Martin (LMT.US)$ , $General Dynamics (GD.US)$, North American aviation giant $Northrop Grumman (NOC.US)$, commercial and military aerospace components leader $TransDigm (TDG.US)$, aerospace company $Howmet Aerospace (HWM.US)$ , stun gun manufacturer $Axon Enterprise (AXON.US)$, defense contractor $L3Harris Technologies (LHX.US)$, aerospace, defense, and electronics supplier $Heico-A (HEI.A.US)$ Corporation, industrial sensor giant $Teledyne Technologies (TDY.US)$, aerospace, defense, and nuclear equipment provider $Curtiss-Wright (CW.US)$, military contractor $Leidos (LDOS.US)$, $Elbit Systems (ESLT.US)$, $Jacobs Engineering (J.US)$, $BWX Technologies (BWXT.US)$, $Textron (TXT.US)$, $Booz Allen Hamilton Holding Corp (BAH.US)$ , $AeroVironment (AVAV.US)$, $Kratos Defense & Security Solutions (KTOS.US)$, $Leonardo DRS, Inc. (DRS.US)$ , $Huntington Ingalls Industries (HII.US)$, and $CACI International (CACI.US)$.

In particular, Lockheed Martin appears to be the most likely candidate. Lutnick noted that 97% of the company's revenue derives from the U.S. government, positioning it as virtually a government department. According to the DefenseNews 2024 rankings, Lockheed Martin is the world's highest-revenue defense company. Other top U.S. contractors include $RTX Corp (RTX.US)$ , $Northrop Grumman (NOC.US)$ , $General Dynamics (GD.US)$ , and $Boeing (BA.US)$ .

Markets Split Over the Case

Industry analysts are cautioning that a Trump administration move to invest in defense contractors could raise serious conflicts of interest and questions about its legality. Additional concerns include whether government ownership in defense firms might influence billions of dollars in Pentagon contract bids, or if holding stakes in multiple companies could mitigate potential conflicts.

Becca Wasser, head of defense at Bloomberg Economics, pointed out that such a potential deal could mirror the Pentagon's prior actions—invoking the Defense Production Act to acquire an unprecedented $400 million stake in $MP Materials (MP.US)$, the sole U.S. supplier of rare earths.

However, the rationale behind a Trump administration pursuit of a stake in Lockheed Martin remains unclear, especially as it could further erode competition in an industry already criticized for excessive consolidation over the past decades.

Jefferies analyst Sheila Kahyaoglu remarked, "There is no distress at Lockheed, or a need for capital that public markets can’t meet. Beyond some new, unexpected, federal policy of owning pieces of large U.S. companies just because, there isn’t a good reason for the government to invest in defense stocks."

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