Howmet Aerospace (NYSE: HWM) shares slipped after Elon Musk announced that SpaceX intends to manufacture its own industrial gas turbine blades and vanes. Analysts at Bernstein, however, view the pullback as a buying opportunity rather than a warning sign.

HWM opened at $259.61 on Friday, well below Bernstein's $328 price target, which implies roughly 24% upside from the August 28 closing price of $264.85.

SpaceX's In-House Turbine Ambitions

SpaceX aims to install 20 gigawatts of behind-the-meter power capacity by the end of 2027 for AI data centers in Bastrop, Texas. To achieve this, the company plans to bring turbine blade production in-house.

Musk has previously identified supplier concentration as a bottleneck for the industry. Howmet is that bottleneck: the company controls more than 50% of the industrial gas turbine blade castings market.

Bernstein analysts argue that SpaceX's move toward self-supply reflects how tight the market is, rather than any weakness in Howmet's position. The backdrop is a broader surge in demand for gas turbines as AI data centers strain the U.S. power grid, leaving equipment makers and their suppliers with multi-year backlogs across the industry.

Howmet maintains long-term supply agreements with every major industrial gas turbine producer. Those agreements are believed to run to around 2030, consistent with Musk's own comments that turbine blades are effectively sold out through that period.

SpaceX's manufacturing push is also expected to focus on meeting its own internal needs, rather than competing with Howmet across the broader market.

Technical hurdles remain as well. Producing turbine blades at scale is not straightforward, and SpaceX may struggle to reach volume production within the 18-month window it needs. Turbine blades are precision-cast from superalloys using directional solidification and single-crystal processes, a manufacturing discipline that incumbents like Howmet have built over decades — a meaningful barrier for any new entrant aiming at volume production quickly.

Strong Fundamentals

Howmet's first new capacity expansion came online in Q2, with at least six more expansion efforts in the pipeline. Its industrial gas turbine business grew 38% during the quarter.

The company reported Q2 EPS of $1.33, beating the $1.24 consensus estimate. Revenue came in at $2.55 billion against analyst expectations of $2.43 billion, up 24.1% year over year.

Howmet set Q3 2026 EPS guidance of $1.34 to $1.36 and full-year 2026 guidance of $5.23 to $5.31. Beyond SpaceX, investors will be watching how quickly the six remaining capacity expansions come online and whether long-term supply agreements are extended beyond 2030 as data-center power demand continues to build.

Analyst Ratings and Institutional Interest

Wall Street remains largely bullish. The consensus rating is Moderate Buy, with an average price target of $316.22. JPMorgan lifted its target to $350, Morgan Stanley sits at $335, and Susquehanna raised its target to $340.

Institutional investors own 90.46% of the company. NEOS Investment Management increased its stake by 13.1% in Q2, bringing its holdings to approximately $17.44 million in value.

Howmet also raised its quarterly dividend from $0.12 to $0.14 per share, paid August 25. The annualized dividend stands at $0.56, a yield of 0.2%.

The stock's 52-week range sits between $173.38 and $310.00, with a 50-day moving average of $275.44.