Musk's tweet sends turbine blade leader tumbling! SpaceX (SPCX.US) announces in-house production of gas turbine blades, Howmet (HWM.US) suffers biggest drop in 16 months

According to Zhihui Finance APP, aerospace precision parts giant Howmet Aerospace (HWM.US) closed down 7.51% on Monday, plunging as much as 9% during the session and hitting a two-month low, marking its largest single-day decline since April 2025. The trigger for the sell-off came from a statement by Musk on social platform X: SpaceX will independently cast industrial gas turbine blades and vanes, directly targeting the current core bottleneck constraining gas turbine production capacity.

In a weekend post, Musk said that both SpaceX (SPCX.US) and Tesla (TSLA.US) are each working to build 100 GW of annual solar capacity, but for the next few years, natural gas power generation will remain a key support to fill the electricity gap. He pointed out that casting turbine blades and vanes is currently the primary obstacle to ramping up turbine production, and if SpaceX manufactures these parts itself, it could accelerate the commissioning of natural gas turbine units by up to 18 months—he described this as a “profound game-changer.”

Previous reports indicated that SpaceX is building a blades and vanes foundry in Bastrop, Texas. Musk’s statement confirmed, for the first time officially, the strategic intent behind this plan. The facility is reportedly intended to serve a planned 20 GW power project, mainly supplying power to artificial intelligence (AI) data centers, and is targeted for completion by the end of 2027.

Howmet is among the very few companies worldwide with the capability to cast high-temperature section blades and vanes for industrial gas turbines, along with Berkshire Hathaway (BRK.A.US)-owned Precision Castparts, Consolidated Precision Products, and Doncasters—comprising this highly concentrated supply structure. Among them, Howmet is the only publicly listed company, making it the most direct outlet for investor sentiment regarding this news.

The gas turbine business has become one of Howmet’s fastest-growing segments: the company’s first-quarter gas turbine revenue surged 39% year-on-year, with a 25% increase projected for all of 2025. Robust demand from AI data centers for rapidly deployable power has led to a supply shortage in turbine components, supporting Howmet’s pricing power and share performance. SpaceX’s entry, in theory, could divert Howmet’s future orders and weaken its current bargaining advantage stemming from supply shortages.

Amid the sharp price drop, major Wall Street investment banks offered sharply differing interpretations.

Bernstein was clear that the sell-off was excessive. Analyst Douglas Harned wrote in a report: “We believe the SpaceX announcement poses virtually no risk to Howmet and actually sends a positive signal.” His core logic is that SpaceX’s move precisely underscores how tight supply is in the turbine blade market, not dissatisfaction with Howmet’s products. Bernstein noted that Howmet has long-term supply agreements with major industrial gas turbine manufacturers, some extending through 2030; the company has new capacity coming online from Q2 onward and expects at least six additional expansion projects before Q4, potentially increasing blade capacity by up to 38% over Q1 2025 levels.

Bernstein also questioned whether SpaceX can achieve scaled production within 18 months. “These components must operate under extreme temperatures and stress, presenting a very high technical barrier, and rapid mass production is extremely difficult.” The firm expects that even if SpaceX’s plant succeeds, output will primarily supply internal needs rather than transition to supplying the external foundry market. Additionally, SpaceX is unlikely to cover complex processes such as advanced coatings. Bernstein maintained an “Outperform” rating and significantly increased its price target from $248 to $328.

Jefferies gave a more cautious time estimate. Analyst Sheila Kahyaoglu estimated that the market size for aerospace and industrial gas turbine engine products will be about $10 billion in 2025, and based on channel checks, SpaceX’s in-house products are expected to take about four years to enter the market.

Deutsche Bank believes the market’s concerns are “far less severe than they appear.” The bank stated that, in theory, SpaceX could still choose to cooperate with existing blade manufacturers like Howmet or Precision Castparts instead of building the entire capability in-house. Even if self-production succeeds, the positioning is more likely to be vertically integrated to meet SpaceX’s own power needs, rather than becoming a commercial supplier to the industry.

Currently, Musk’s statement has not disclosed key details: whether SpaceX is directly purchasing Howmet’s products, the planned casting capacity to be installed, or whether it will sell components to external turbine manufacturers—all are unknown. These variables will determine the actual financial impact on Howmet.

From another perspective, SpaceX’s huge investment in the casting segment further confirms the severity of the supply bottleneck in the industry. If SpaceX’s capacity expansion ultimately accelerates the overall increase in turbine installations, rather than simply replacing existing suppliers’ share, the long-term impact on Howmet could be neutral or even somewhat positive—especially as AI-driven power demand continues to exceed everyone’s expectations.

As of Monday’s close, Howmet’s stock price was about $244.95.