Howmet (HWM.US) panicked over being "robbed of its rice bowl"! Citi and Bernstein loudly claim it was wrongly killed: SpaceX (SPCX.US) entering the market precisely shows demand is very strong

According to Zhitong Finance APP, aerospace precision component giant Howmet Aerospace (HWM.US) closed down 7.51% on Monday, plunging as much as 9% intraday, hitting a two-month low and recording its largest single-day drop since April 2025.

The trigger for the sell-off came from a statement by Elon Musk on social platform X. Musk said that SpaceX (SPCX.US) and Tesla (TSLA.US) are each working on building 100GW of annual solar capacity, but in the next few years, natural gas power generation will remain the key support to fill the power gap. He pointed out that casting of turbine blades and vanes is currently the main bottleneck restricting turbine output growth. If SpaceX produces these components in-house, the commissioning time for natural gas turbine units could be accelerated by up to 18 months.

Previous reports indicated that SpaceX is building a blade and vane foundry in Bastrop, Texas. Musk's statement is the first official confirmation of the strategic intent behind this plan. The facility is reportedly intended to serve a planned 20GW power project, primarily to power artificial intelligence (AI) data centers, with the goal of being completed by the end of 2027.

Howmet is one of 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. In the first quarter, the company's gas turbine revenue surged 39% year-over-year, and the full-year 2025 increase is projected to be 25%. The strong demand for rapidly deployable power by AI data centers has led to a supply shortage of turbine components, supporting Howmet's pricing power and stock performance. Theoretically, SpaceX's entry may divert future orders from Howmet and weaken the bargaining advantage brought by current supply shortages, which is a key reason for Howmet’s sell-off on Monday.

However, according to Wall Street giant Citi, Howmet's decline instead creates a potential buying opportunity. Citi points out that SpaceX's entry reflects not a deterioration of Howmet's competitive position, but strong demand and scarce turbine manufacturing capacity. The firm noted that SpaceX mainly plans to produce these parts for its own use, while continuing to source from the existing industrial gas turbine supply chain. This news further highlights the critical nature of Howmet's components and suggests that demand may exceed the company's roughly $2 billion industrial gas turbine revenue target.

Citi’s positive view is not limited to the gas turbine market. The bank describes Howmet as one of the leading compound growth companies within aerospace and defense among its coverage, pointing out record profitability, a large backlog of commercial aircraft orders, strong aftermarket business, and a growing defense aviation segment. Citi also highlights Howmet's engine product and fastening systems business with profit margins over 30%, a strong balance sheet, and capital allocation favoring shareholders.

Citi says commercial aircraft manufacturers are still striving to ramp up output, while new aircraft demand continues to outpace supply. This supply-demand imbalance, coupled with Howmet’s aftermarket business, could provide tailwinds for the company’s earnings growth in the coming years. Citi forecasts Howmet’s adjusted EPS to reach $5.37 in 2026, $6.76 in 2027, and $8.08 in 2028. The report notes Citi’s profit projections for 2027 and 2028 are both above consensus. The bank maintains a “Buy” rating on Howmet and sets a target price of $329, representing still 34.3% upside from Monday’s close.

Howmet is expected to discuss the outlook for aerospace and industrial gas turbine businesses at its upcoming investor meeting. Citi believes this could be a catalyst for the stock to rise. More details on new capacity, customer commitments, and the possible role SpaceX will play in the supply chain will help determine whether initial market concerns over competition will persist.

Additionally, investment bank Bernstein has reached similar conclusions. Its analysts said that SpaceX’s move appears more driven by supply constraints and a desire to strengthen supply chain control, rather than dissatisfaction with Howmet. Producing turbine blades capable of withstanding extremely high temperatures and mechanical stress requires specialized casting equipment, technical expertise, and complex coating processes, representing significant barriers to rapid entry in this field. Bernstein maintains an “Outperform” rating on Howmet and raises its target price from $248 to $328.

Bernstein also questions whether SpaceX can build large-scale production capacity within Musk’s proposed 18-month timetable; it suggests that SpaceX is unlikely to replicate every link of the existing mature manufacturing process, and even if production succeeds, output will likely be mostly used to meet its own massive electricity needs rather than compete widely with existing suppliers.

Meanwhile, Howmet is also expanding its own turbine blade business. Bernstein says new capacity came online in the second quarter, and at least six capacity expansion projects are expected by the end of the fourth quarter. Overall, 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 to 2030. The contractual demand associated with these agreements matches Musk’s comments about turbine component shortages possibly lasting through the end of this decade, supporting the idea that SpaceX increasing production may drive overall turbine deployments higher, rather than simply squeezing Howmet sales.

Overall, for investors, the core issue may not be whether SpaceX can produce some turbine blades in-house, but whether power demand from AI infrastructure is growing fast enough to keep all qualified manufacturers operating at full capacity. Both Citi and Bernstein believe the news indicates the entire industry faces a shortage of capacity, and this environment may ultimately strengthen Howmet’s market position rather than weaken it.