In March 1983, President Ronald Reagan stunned the world with a bold proposal: a space-based missile defense system that would render nuclear weapons obsolete.
Dubbed the Strategic Defense Initiative (SDI)—and quickly nicknamed “Star Wars” by the press—Reagan’s plan aimed to protect the U.S. from intercontinental ballistic missile attacks using lasers and particle beams in outer space. It was a visionary concept, perhaps decades ahead of its time.
Although ultimately downsized and defunded following the collapse of the Soviet Union—an estimated $30 billion was poured into the project between 1983 and 1989—SDI planted the seeds of a high-tech defense future.
Today, more than 40 years later, that future may be arriving faster than we think.
President Donald Trump’s recent executive order revives many of the SDI’s ambitions, albeit with a modern twist. His January 27 directive launched what he first called an “Iron Dome for America,” later rebranded as the “Golden Dome.”
A New Era of Missile Defense
If realized, I believe Trump’s Golden Dome would be a game-changer.
Similar to Israel’s famous Iron Dome, which began operating in 2011, Trump’s iteration envisions a system of space-based interceptors, high-altitude sensors and real-time tracking satellites capable of identifying and neutralizing incoming threats before they breach U.S. airspace. Think of it as a virtual dome guarding the country from missile attacks launched by rogue states or adversaries.
To help back this vision, Trump has proposed a $1 trillion defense budget for fiscal year 2026—an eye-popping amount that would represent a nearly 12% increase over current levels. According to the president, some of the additional spending may come from cuts recommended by Elon Musk’s Department of Government Efficiency (DOGE).
To be clear, the U.S. is already spending well over $1 trillion on its military as the annual defense budget has increased for the past four fiscal years through 2025.
From “Star Wars” to Golden Dome
The similarities between Reagan’s SDI and Trump’s Golden Dome are obvious, but there are some notable differences. Among the biggest is that much of the technology required for Star Wars was mostly theoretical in the 1980s, whereas today, it’s a different story.
Think about it: SpaceX has launched hundreds of satellites into low Earth orbit, and artificial intelligence (AI) now drives battlefield decisions. Next-generation, hypersonic missiles, which can travel at five times the speed of sound (Mach 5) and evade radar detection, have fundamentally changed how we think about speed and defense.
The private sector is stepping up in a major way. According to an exclusive Reuters report, SpaceX, Palantir and Anduril are collaborating on a bid to build a satellite constellation capable of tracking and targeting hostile missiles. This proposal envisions 400 to 1,000 satellites orbiting the Earth, forming the backbone of the Golden Dome’s so-called custody layer, which provides sensing functions.
These aren’t just science fiction concepts anymore. They’re technologically feasible and potentially deployable within the decade.
Other major players like Boeing are pitching existing assets like the X-37B spaceplane, while defense startups such as Epirus, Ursa Major and Armada are also jockeying for a role. The Pentagon has reportedly received interest from over 180 companies, Reuters says.
Big Bets, Big Risks
As exciting as it all sounds, I’m keeping a level head. There are real risks involved. For one, the price tag will be enormous. Some estimates suggest the Golden Dome project could cost hundreds of billions of dollars, especially if it includes ground- and space-based layers. The initial engineering work alone could cost between $6 billion and $10 billion, according to SpaceX estimates.
There’s also the issue of reliability. Space-based interceptors need to work instantly under extreme conditions, years after being deployed. That’s a high bar to clear, even for today’s most advanced aerospace companies.
Trade Tensions and Supply Chain Pressure
Meanwhile, we’re dealing with a complex global trade environment. Earlier this month, President Trump imposed the largest tariff increases in U.S. history, sending the Bloomberg Economics’ Trade Policy Uncertainty (TPU) Index to a record high.
While defense contractors like Lockheed Martin and Northrop Grumman have largely maintained their 2025 guidance, they’re not immune to global supply chain disruptions or rising material costs.
Even with the noise, I believe the aerospace and defense sector remains one of the most resilient segments of the U.S. economy, supported by rising demand for sophisticated weaponry amid the war in Ukraine and escalating tensions in the Middle East.
What It Means for Investors
Like many other areas of the economy, national defense is entering a transformational era. Just as Eisenhower’s Interstate Highway System led to a generation of economic growth, the build-out of next-gen missile defense could usher in massive public-private partnerships and foster incredible innovation.
The Golden Dome initiative is still in its early stages, but the commitment is real. Lawmakers are moving quickly. In February, Senators Kevin Cramer and Dan Sullivan introduced the IRON DOME Act, which would allocate nearly $19.5 billion in fiscal 2026 for missile defense technologies, including $900 million for space-based systems. And that’s just a down payment.
Investors, I think, would do well to watch this space—pun intended.