Shares of aerospace precision components giant Howmet Aerospace Inc. (HWM.US) closed down 7.51% on Monday, falling as much as 9% intraday to hit a two-month low, marking their steepest single-day decline since April 2025. The sell-off was triggered by a statement from Elon Musk on social platform X, in which he revealed that SpaceX and Tesla are each working toward building 100 gigawatts of annual solar capacity. However, he stressed that natural gas power generation remains the critical bridge to fill electricity gaps over the next several years. Musk pointed out that the casting of turbine blades and vanes is currently the main bottleneck limiting turbine production, and if SpaceX were to manufacture these components itself, it could bring natural gas turbine deployment timelines forward by as much as 18 months.

Reports had previously surfaced indicating that SpaceX is building a blade and vane casting facility in Bastrop, Texas. Musk's remarks mark the first official confirmation of the strategic intent behind this plan. The facility is reportedly intended to serve a planned 20-gigawatt power project, primarily to supply electricity to AI data centers, with a target completion date by the end of 2027. Howmet is among the very few companies globally with the capability to cast high-temperature-section blades and vanes for industrial gas turbines. The gas turbine business has become one of Howmet's fastest-growing segments, with first-quarter revenue in that division surging 39% year-over-year and a 25% increase projected for the full year of 2025.

The robust demand from AI data centers for rapidly deployable power has left turbine components in short supply, underpinning Howmet's pricing power and stock performance. In theory, SpaceX's entry could divert future orders away from Howmet and erode the bargaining advantage stemming from the current supply shortage, which is precisely why Howmet experienced such a sharp sell-off on Monday. However, according to Wall Street giant Citi, the decline in Howmet's shares has actually created a potential buying opportunity. Citi argues that SpaceX's move does not reflect a deterioration in Howmet's competitive position but rather points to strong demand and the scarcity of turbine manufacturing capacity. The bank notes that SpaceX primarily plans to produce these components for its own use, while continuing to source from the existing industrial gas turbine supply chain.

Citi believes this news further underscores the critical nature of the components Howmet produces and suggests that demand may exceed the company's roughly $2 billion industrial gas turbine revenue target. The bank's positive outlook is not limited to the gas turbine market. It describes Howmet as one of the leading aerospace and defense compound-growth companies within its coverage, citing record profitability, a massive backlog of commercial aircraft orders, a robust aftermarket business, and a growing defense aerospace segment. Citi also highlights that Howmet's engine products and fastening systems businesses boast margins exceeding 30%, and that the company maintains a strong balance sheet with capital allocation favoring shareholders.

Citi points out that commercial aircraft manufacturers are still struggling to ramp up production, while demand for new planes continues to outpace supply. This supply-demand imbalance, combined with Howmet's aftermarket business, could provide a tailwind for earnings growth over many years. The bank projects Howmet's adjusted earnings per share to reach $5.37 in 2026, $6.76 in 2027, and $8.08 in 2028. The report notes that Citi's earnings estimates for 2027 and 2028 are both above consensus. The bank maintains a "Buy" rating on Howmet with a price target of $329, implying a 34.3% upside from Monday's closing price.

Howmet is expected to discuss the outlook for both its aerospace and industrial gas turbine businesses at an upcoming investor conference. Citi views this as a potential catalyst for share price appreciation. More details regarding new capacity, customer commitments, and the potential role SpaceX might play in the supply chain will help determine whether the market's initial concerns about competitive dynamics will persist. Meanwhile, investment bank Bernstein has reached a similar conclusion. The firm's analysts suggest that SpaceX's initiative appears driven more by supply constraints and a desire to gain greater control over its supply chain, rather than dissatisfaction with Howmet. Producing turbine blades capable of withstanding extreme heat and mechanical stress requires specialized casting equipment, technical expertise, and complex coating processes, creating significant barriers to rapid entry into this field.

Bernstein maintains an "Outperform" rating on Howmet and has raised its price target from $248 to $328. The firm also questions whether SpaceX can establish large-scale production capacity within Musk's proposed 18-month timeline. Bernstein further states that SpaceX is unlikely to replicate every aspect of existing mature manufacturing processes, and even if it succeeds in production, it would likely use the output primarily to satisfy its own vast power needs rather than engage in broad competition with existing suppliers. In the meantime, Howmet is also expanding its own turbine blade operations. Bernstein notes that new capacity came online in the second quarter, with at least six additional expansion projects expected to be operational by the end of the fourth quarter.

Collectively, these projects could increase capacity by up to 38% compared to the first quarter of 2025. Howmet has also signed agreements with major turbine manufacturers extending through 2030. The contracted demand associated with these agreements aligns with Musk's assertion that turbine component shortages could persist until the end of this decade, supporting the view that SpaceX's added production could drive an increase in overall turbine deployments rather than merely cannibalize Howmet's sales. Ultimately, for investors, the core question may not be whether SpaceX can produce some turbine blades on its own, but rather whether electricity demand from AI infrastructure is growing fast enough to keep all qualified manufacturers operating at full capacity. Both Citi and Bernstein believe this news indicates that the entire industry is facing capacity constraints, and such an industry backdrop could ultimately strengthen Howmet's market position rather than weaken it.