Howmet Aerospace (HWM) shares pulled back after Elon Musk revealed that SpaceX intends to manufacture industrial gas turbine blades and vanes in-house, but Bernstein's research team sees the selloff as a buying opportunity rather than a reason for concern.

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

SpaceX's In-House Production Plans

The aerospace company plans to deploy 20 gigawatts of behind-the-meter power infrastructure by late 2027 to support AI data center operations in Bastrop, Texas, and reaching that goal requires vertical integration of turbine blade manufacturing.

The backdrop is a broader surge in electricity demand tied to AI data center buildouts, which has pushed operators toward gas-fired generation and tightened the supply of critical turbine components industry-wide.

Musk has repeatedly pointed to supplier concentration as a critical constraint for the sector, and Howmet embodies that constraint: it commands more than half of the global industrial gas turbine blade castings market.

Bernstein's analysts, however, argue that SpaceX's move toward internal production reflects market tightness rather than any weakness in Howmet's competitive position.

Howmet maintains extensive supply agreements with every major industrial gas turbine manufacturer, and those contracts reportedly run through approximately 2030 — consistent with Musk's own acknowledgment that turbine blade inventory is essentially depleted through that timeframe.

Moreover, SpaceX's manufacturing effort appears aimed at meeting its own internal needs rather than challenging Howmet's dominance in the broader market.

Significant technical hurdles remain as well. Producing turbine blades at commercial scale is difficult, and SpaceX may struggle to reach volume output within its targeted 18-month timeline.

Investors watching this dynamic will likely focus on SpaceX's manufacturing progress against that timeline, as well as Howmet's contract renewals with major turbine OEMs as the 2030 horizon approaches.

Strong Financial Results Underpin the Bullish View

Howmet's first capacity expansion facility came online during the second quarter, with at least six additional expansion projects underway. Industrial gas turbine operations grew 38% over the period.

Second-quarter earnings per share came in at $1.33, beating the consensus forecast of $1.24. Revenue totaled $2.55 billion against analyst expectations of $2.43 billion, up 24.1% year over year.

Management guided to third-quarter 2026 EPS of $1.34 to $1.36 and full-year 2026 EPS of $5.23 to $5.31.

Wall Street Sentiment and Ownership

The Street remains broadly positive on the stock, with a consensus rating of Moderate Buy and a mean price target of $316.22. JPMorgan raised its target to $350, Morgan Stanley holds a $335 target, and Susquehanna lifted its projection to $340.

Institutional investors own 90.46% of outstanding shares. NEOS Investment Management increased its position by 13.1% in the second quarter, bringing its holdings to roughly $17.44 million.

The company also raised its quarterly dividend from $0.12 to $0.14 per share, paid on August 25. The annualized payout of $0.56 represents a 0.2% yield.

The stock trades within a 52-week range of $173.38 to $310.00, with a 50-day moving average of $275.44.