Did Musk's cross-industry capacity grab cause a false alarm? Bernstein points out that SpaceX's in-house development has a negligible impact, maintaining a "Outperform" rating for Howmet (HWM.US).

Notably, investment bank Bernstein believes that although Musk plans to produce some turbine blade components in-house, the partnership between Howmet (HWM.US) and SpaceX (SPCX.US) and its overall position in the industrial gas turbine market should remain solid. The firm maintains an "outperform" rating on aerospace precision parts giant Howmet Aerospace and raised its target price from $248 to $328. Howmet's stock closed at $264.85 on August 28. This analysis stems from Musk's online remarks last Saturday, where he stated that SpaceX intends to produce blades and rotor blades for industrial gas turbines. These components will power a planned artificial intelligence data center in Bastrop, Texas, with a capacity of 20 gigawatts, aiming to be completed by the end of 2027. As a result of this news, Howmet's stock saw a decline of up to 9% during regular trading hours on Monday. At first glance, this move by SpaceX seems to pose a threat to Howmet. This aerospace manufacturer is a major supplier of industrial gas turbine blades worldwide, including advanced components used for models with the highest combustion temperatures. However, Bernstein believes that SpaceX's decision reflects more on supply-side constraints rather than dissatisfaction with Howmet. The demand for turbine blades has surged, while production capacity is limited, partly due to the specialized equipment and processes required to manufacture these blades. Therefore, SpaceX's desire to control its own supply chain may be the driving factor behind its decision to internalize part of the production process. Bernstein analyst Douglas Harned wrote, "We believe the threat posed by SpaceX's announcement to Howmet is minimal; on the contrary, we see positive signals." The firm pointed out that the long-term agreements Howmet has with major industrial gas turbine manufacturers demonstrate the durability of demand. Bernstein noted that new capacity began coming online in the second quarter, with at least six more capacity expansion projects expected to be completed before the end of the fourth quarter. These projects could increase Howmet's turbine blade capacity by as much as 38% compared to the first quarter of 2025. Bernstein stated that these supply agreements will last until 2030, which aligns with Musk's suggestion that turbine blade demand may remain high throughout the decade. Analysts believe SpaceX's actions do not signal a loss of business for Howmet, but rather highlight the pressure of market demand exceeding available capacity. The impact on Howmet may also depend on the scope of SpaceX's manufacturing ambitions. Bernstein indicated that SpaceX is unlikely to engage in the complex coating and casting processes involved in the entire production process. Instead, it may focus on areas of vertical integration that align more closely with its existing business. Analysts are also skeptical about whether SpaceX can quickly produce the necessary blades at a sufficient scale. Musk suggested that the company might achieve mass production within 18 months, but Bernstein believes that given the technical manufacturing requirements of components operating under extreme heat and stress, this target may be difficult to achieve. The firm added that any production achieved by SpaceX is likely to be primarily used to meet its own power needs rather than engage in widespread competition with established suppliers like Howmet. Bernstein concluded that the decline in Howmet's stock due to concerns around SpaceX may actually present a buying opportunity. For investors, the larger unresolved question is not whether turbine blade demand will remain strong through 2030, but whether the rapid expansion of power-hungry AI infrastructure can sustain this demand beyond 2030.