A cross-industry capacity scramble by Musk turns out to be a false alarm? Bernstein points out that SpaceX's self-research has minimal impact, maintains an "outperform" rating for Howmet (HWM.US)

Zhitong Finance APP noted that investment bank Bernstein believes that although Musk plans to produce some turbine blade components himself, the partnership between Howmet (HWM.US) and SpaceX (SPCX.US), as well as Howmet’s overall position in the industrial gas turbine market, should remain solid.

The firm maintained its "Outperform" rating on aerospace precision parts giant Howmet Aerospace, and raised its target price from $248 to $328. On August 28, Howmet’s shares closed at $264.85.

This analysis stems from Musk’s online comments last Saturday, where he said SpaceX intends to produce blades and vanes for industrial gas turbines. These components will be used to support a planned 20-gigawatt AI data center power facility in Bastrop, Texas, which aims to be completed by the end of 2027.

Following the news, Howmet’s stock price dropped as much as 9% during regular trading on Monday.

At first glance, SpaceX’s actions may appear to threaten Howmet. The aerospace manufacturer is a leading global supplier of industrial gas turbine blades, including advanced components for the highest combustion temperature models.

However, Bernstein believes SpaceX’s decision reflects supply-side constraints more than dissatisfaction with Howmet. Demand for turbine blades has soared, but production capacity is limited, partly because manufacturing these blades requires specialized equipment and processes. Thus, SpaceX’s wish to control its own supply chain may be what’s driving its decision to internalize part of the manufacturing process.

Bernstein analyst Douglas Harned wrote, "We believe SpaceX’s statement poses little threat to Howmet; on the contrary, we see positive signals."

The firm pointed out that Howmet’s long-term agreements with major industrial gas turbine manufacturers demonstrate persistent demand. Bernstein said new capacity came online in the second quarter, and at least six additional expansion projects are expected by the end of the fourth quarter. Altogether, these projects could boost Howmet’s turbine blade capacity by as much as 38% by the first quarter of 2025.

Bernstein said these supply agreements will last until 2030, which is consistent with Musk’s suggestion that turbine blade demand could remain high through the end of the decade. Analysts believe SpaceX’s actions do not signal a loss of business for Howmet; instead, they highlight the pressure created by market demand outpacing available capacity.

The impact on Howmet may also depend on the scope of SpaceX’s manufacturing ambitions. Bernstein said SpaceX is unlikely to engage in complex coating and casting steps across the entire production process. Instead, it may focus on vertically integrated areas that better align with its existing operations.

Analysts also questioned whether SpaceX could quickly scale up to produce the required blades in sufficient quantity. Musk suggested the company could achieve mass production within 18 months, but Bernstein believes that, given the technical challenges of manufacturing parts operating under extreme heat and stress, this goal may be difficult to achieve.

The firm added that any production SpaceX achieves is likely to be used mainly to meet its own power needs, rather than to compete broadly with established suppliers like Howmet.

Bernstein concluded that concerns about SpaceX, which have caused Howmet’s stock price to fall, may actually present a buying opportunity. For investors, the bigger unresolved question is not whether turbine blade demand will stay strong until 2030, but whether the rapid expansion of energy-intensive AI infrastructure will extend this demand beyond 2030.