Why General Dynamics Stock Soared Today
Key Points
The President wants defense companies to invest in production, not dividends and stock buybacks.
- 10 stocks we like better than General Dynamics ›
"$1.5 trillion" -- it isn't just for SpaceX anymore.
Last month, SpaceX floated plans to run a $1.5 trillion initial public offering of stock. Yesterday, President Trump announced on Truth Social: "For the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, rather $1.5 Trillion Dollars ... This will allow us to build the 'Dream Military' that we have long been entitled to, and, more importantly, that will keep us SAFE and SECURE."
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Defense stocks in general are surging, and General Dynamics (NYSE: GD) stock in particular is up 6% as of 9:50 a.m. ET.
Image source: Getty Images.
Details, please
The President didn't provide a whole lot of detail on where he wants to spend $1.5 trillion, or which companies will benefit from government largesse. One thing he did make crystal clear:
Once General Dynamics and its peers get the government money, they must spend it on boosting weapons production -- not just hand it over to executives in the form of fatter paychecks, nor funnel it to shareholders via dividends and stock buybacks.
In a separate but clearly related post, the President blasted defense companies for "exorbitant and unjustifiable" executive compensation, insisting that defense CEOs shouldn't earn more than $5 million per year. He also promised to "not permit Dividends or Stock Buybacks for Defense Companies" until they get better at producing and maintaining military equipment.
Is General Dynamics stock a buy?
What does this mean for investors? It's a bit of a double-edged sword. Assuming Congress agrees, GD can expect a big boost in annual revenue. It will need to make significant capital investments, however, which will cut into its profit margin on that revenue.
Ultimately, earnings may end up flat.
Should you buy stock in General Dynamics right now?
Before you buy stock in General Dynamics, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and General Dynamics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $489,300!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,159,283!*
Now, it’s worth noting Stock Advisor’s total average return is 974% — a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of January 8, 2026.
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.
Recommended Articles
