Wall Street's potential winners and losers from Trump's tax bill

By Shashwat Chauhan

(Reuters) -As President Donald Trump's sweeping tax-cut and spending bill heads to the Senate, analysts examine how his broad-ranging policies could turn the fortunes of U.S. companies if the package is enacted as law.

What Trump has dubbed a "big, beautiful bill", narrowly passed the Republican-controlled House on May 22.

The bill seeks to extend tax breaks, set during Trump's first term in 2017 and on track to expire at the end of 2025, for multinational corporations. It is also expected to fulfill many of Trump's populist campaign pledges, including an immigration crackdown and ending some green energy incentives.

The tax breaks are largely expected to be positive for the U.S. stock markets, but some analysts see only a modest upside.

"Since the 2025 tax cuts are primarily an extension of the current tax code, we expect changes to provide only marginal benefits to equity performance," Morgan Stanley analysts said in a note last month.

Overall, the bill is expected to add about $2.4 trillion to the $36.2 trillion U.S. debt pile, the Congressional Budget Office said on Wednesday.

Here is a list of industries and companies that are likely to be affected by the bill:

AEROSPACE AND DEFENSE - WINNERS

Defense companies could see renewed interest from investors as the new bill looks to step up spending on air and missile defense, munitions and border security.

"There should be some benefit there to the defense contractors," said Chris Haverland, global equity strategist at Wells Fargo Investment Institute.

"We currently rate industrials at a neutral. There'll be some offsets there, but there should be some benefits to the defense area."

Brian Mulberry, client portfolio manager at Zacks Investment Management, named defense contractors RTX and General Dynamics as potential beneficiaries. The iShares US Aerospace & Defense ETF is trading at all-time highs.

RENEWABLE ENERGY - LOSERS

Shares of U.S. solar companies slumped on May 22, as the bill aims to cancel funding for green-energy grant programs, which were established under the Biden administration in the 2022 Inflation Reduction Act.

"If the bill passes, that's going to be a huge negative for renewable (energy stocks)," said Dave Grecsek, managing director of investment strategy and research at wealth management firm Aspiriant.

"We could have a little bit more downside to the renewable energy space, but a lot of it is already priced in."

Companies including First Solar, Enphase Energy and Sunrun are all in the red for the year.