Musk Claims SpaceX to Challenge Gas Turbine Market

Written by Emily J. Thompson, Senior Investment Analyst

  • Turbine Casting Capability Boost: Musk announced that SpaceX will establish a foundry in Texas focused on casting gas turbine blades and vanes, which is expected to bring new turbines online up to 18 months sooner, significantly enhancing production capacity and altering market dynamics.
  • Market Reaction: Shares of Howmet Aerospace (HWM) fell 7.5% following Musk's announcement, as investors feared that SpaceX's entry could weaken HWM's market position in casting, leading to potential demand loss and impacting its stock price and profitability.
  • Industry Outlook: Jefferies analysts project the aerospace and industrial gas turbine market to reach $10 billion in sales by 2025, and while SpaceX products are expected to take four years to arrive, concerns about their potential impact remain prevalent in the market.
  • Investor Sentiment Shift: On Stocktwits, retail investor sentiment around HWM shifted from bearish to bullish, with some users arguing that HWM's stock is overvalued compared to peers, suggesting that the market's reaction to SpaceX's threat may be overdone and presenting a potential buying opportunity.

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Analyst Views on HWM

Wall Street analysts forecast HWM stock price to fall

About HWM

Howmet Aerospace Inc. is engaged in lightweight metals engineering and manufacturing. Its segments include Engine Products, Fastening Systems, Engineered Structures and Forged Wheels. Engine Products produces investment castings, including airfoils, and seamless rolled rings primarily for aircraft engines and gas turbine applications. Engine Products produces rotating parts, as well as structural parts. Fastening Systems produce aerospace fastening systems, as well as commercial transportation. Fastening Systems’ products are also critical components of commercial transportation vehicles and construction, industrial, and renewable energy equipment. Engineered Structures produces titanium ingots and mill products for aerospace and defense applications and is vertically integrated to produce titanium forgings, titanium extrusions, and landing gear components. Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and the commercial transportation market.

About the author

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.

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  • Significant Stock Volatility: Howmet (HWM) experienced a 7.5% drop on Monday, marking its worst one-day decline in 16 months, as concerns arose over Elon Musk's announcement that SpaceX would cast industrial gas turbine blades in-house, potentially impacting future orders.
  • Analysts Remain Optimistic: Citi analyst John Godyn placed Howmet on an 'upside 30-day catalyst watch' while maintaining a Buy rating, suggesting that Monday's decline represents a 'unique and likely short-lived opportunity' to buy, reflecting ongoing demand for Howmet's products.
  • Support from Deutsche Bank: Deutsche Bank analyst Scott Deuschle named Howmet his top pick in the original equipment supply chain with a price target of $343, forecasting earnings growth of 5% to 39% from 2026 to 2029, indicating strong growth potential.
  • Retail Investor Sentiment Positive: Despite competitive pressures, retail sentiment around HWM stock remained 'bullish' over the past 24 hours, with high message volume indicating investor confidence in the company's future performance, as the stock has gained 23% year-to-date.
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  • Stock Volatility: Howmet Aerospace's shares fell nearly 8% on Monday after SpaceX announced plans to produce its own industrial gas turbine castings, impacting investor confidence; however, two Wall Street banks view this as a buying opportunity.
  • Analyst Ratings: Citigroup reiterated a buy rating on Howmet with a price target of $329, implying a 34% upside from Monday's close, while initiating a 30-day Catalyst Watch, reflecting a positive outlook on the stock.
  • Market Share Stability: Despite SpaceX's plans to build its own castings, Bernstein analysts noted that Howmet holds over 50% market share in the industrial gas turbine casting market and has established long-term customer agreements with major producers, indicating strong market positioning.
  • Long-Term Outlook: Howmet's stock has surged 41% over the past year, outperforming the S&P 500's 19% gain; despite facing short-term pressures, analysts generally believe in its robust long-term growth potential, anticipating continued benefits from rising market demand.
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