President Trump Wants $255 Billion to Build 15 Nuclear Battleships

When President Donald Trump first proposed that the U.S. Navy build a fleet of battleships, military analysts were skeptical. Although optimists predicted U.S. contractors might be able to build the lead ship of the class, USS Defiant, for as little as $9 billion, the defense and security experts at Janes thought $14 billion was more likely.

Turns out, they were both wrong -- Defiant will cost $17 billion.

And building 15 Defiant-class warships might cost U.S. taxpayers an incredible $255 billion.

Image source: U.S. Navy.

Military math

Actually, that's probably an overstatement, albeit an easy mistake to make. Working off defense analyst reports that the first Defiant would cost $17 billion, media outlets such as MSN.com consulted their calculators last week and concluded that 15 times $17 billion equals the entire fleet costing $255 billion.

It's not quite that simple.

According to the Department of Defense's fiscal year 2027 budget estimates, the U.S. Navy has requested $1 billion in fiscal 2027 to fund long-lead equipment acquisition needed to build the first Defiant-class vessel. Similar long-lead equipment purchases for the second and third vessels will total $2.5 billion, running from fiscal 2028 through 2031.

Those are just the down payments, however. A further $16.5 billion must be spent to complete the first Defiant-class warship in fiscal 2028, followed by $12.5 billion for the second (in 2030) and $11 billion for the third (in 2031).

Thus, the total money spent to build the first three Golden Battleships comes to $43.5 billion, or approximately $14.5 billion per battleship -- roughly the same amount it costs to build a Ford-class aircraft carrier -- and as more ships are built at prices below that of the very first ship, the average cost should slowly drift lower.

What it means for investors

Best case, we're still probably talking about more than $200 billion in total spending to build a fleet of 15 nuclear battleships. (Did I not mention that? In an evolution of earlier plans, it appears the Navy has shifted its wish list and now wants the Defiant-class battleships to run on uranium rather than diesel.)

$200 billion is still a lot of money, though. Plus, if you're an investor in either General Dynamics (NYSE: GD) or Huntington Ingalls (NYSE: HII), the two big defense contractors most likely to win battleship contracts, it's worth keeping in mind that purchase cost is just the start of the revenue opportunity. Defiant-class battleships may ultimately cost more to maintain and upgrade over their lifespans than it costs to buy them in the first place.

At the same time, so long as these companies stick to the budgets the Navy gives them, the fact that a battleship will cost no more than an aircraft carrier and that costs will fall over time should give this weapons program a fighting chance of surviving Congress long enough for the fleet to be built.

With both General Dynamics and Huntington Ingalls trading around 21 times earnings and facing a big revenue opportunity ahead of them, it may be time to give these two defense stocks a closer look.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.