By Ian Salisbury

FTAI Aviation -- a company mostly known for repairing aircraft engines -- may have found the perfect side hustle to capitalize on investors' seemingly insatiable appetite for artificial intelligence.

AI data centers have been sprouting around the country so rapidly that they have trouble quickly gaining access to reliable power. FTAI Power, a venture rolled out at the end of last year, aims to meet that need by converting worn-out jet engines into generators.

Wall Street, which has been throwing money at utilities and data-center real estate industrial trusts, loves the idea. Shares of FTAI have leapt nearly 25% in 2026 to more than $246. The stock may have further to climb. On Tuesday, Morgan Stanley increased its FTAI target price to $266 from $200.

"We are identifying an emerging, underappreciated theme for aerospace," wrote analyst Kristine Liwag, who rates the stock at Overweight. "The conversion of aero engines into industrial aeroderivative gas turbines for powering AI data centers. This strategic repurposing not only extends the lifecycle and value of aero engines, but also addresses the surging power needs of AI infrastructure."

FTAI Aviation already has a reputation as an innovative aerospace player. The company owns, leases, and maintains a large portfolio of CFM56 jet engines, one of the best-selling models of all time. Its strategy of swapping out and servicing engine segments one at a time, rather than taking entire engines offline for a full overhaul, has helped airlines save time and money.

FTAI's profits surged to $452 million over the past four quarters from $122 million in 2023, according to FactSet .

The plan to power data centers isn't unprecedented. GE Vernova and Siemens both operate "aeroderivative" power businesses. But it could provide a big opportunity for FTAI by extending the life of engines that no longer meet aviation standards.

The new business could add as much as $1 billion to FTAI's annual operating earnings, forecast BTIG late last month. That points to the power unit being a game changer: Current Wall Street projections call for FTAI to generate $1.2 billion in operating earnings in 2025 and $1.5 billion in 2026, according to FactSet.

FTAI has said it expects the new power business to deliver and service around 100 engine/turbine units a year. Each would be capable of delivering about 25 megawatts of electricity, enough to power a medium-size data center.

BTIG estimates the units should sell for $25 million each, realizing operating margins of around 35%, based on company commentary. "Management currently expects that FTAI Power volumes will begin ramping in 2026 and will meaningfully impact earnings starting 2027," wrote analyst Andre Madrid.

The stock isn't without risks. With 2026's run up, FTAI stock is selling for more than 35 times the earnings per share the company is expected to produce over the next year. It fell to a low of around 15 last year after the short-selling firm Muddy Waters Research raised questions about FTAI's accounting methods.

FTAI declined to comment for this article. It previously declined to comment on the accounting issues, although it did release an independent audit that found nothing amiss.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 07, 2026 14:33 ET (19:33 GMT)

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