SpaceX Just Dealt a Big Blow to Howmet Aerospace Stock

SpaceX (SPCX) has just delivered a fresh shock to Howmet Aerospace (HWM), putting one of the company's most closely watched growth opportunities under the spotlight. Shares of Howmet plunged 7.5% after CEO Elon Musk revealed that SpaceX plans to bring the casting of natural-gas turbine blades and vanes in-house, arguing that the move could accelerate the deployment of new turbines by as much as 18 months.

The announcement is particularly significant because Howmet has built a powerful position in the highly specialized turbine-blade market. The company reportedly holds more than 50% of the global market for industrial gas-turbine blades, while its gas-turbine revenue surged 38% in the latest quarter. The business has benefited from a surge in demand as artificial intelligence (AI) data centers require enormous amounts of electricity and utilities race to expand power-generation capacity.

Musk's move, however, could challenge that favorable backdrop by signaling that major power users may increasingly seek to bypass supply-chain bottlenecks through vertical integration. Plus, SpaceX's planned foundry could eventually reduce its reliance on specialized suppliers and potentially encourage other large customers to consider similar strategies.

Still, the selloff may have moved faster than the fundamental threat. Bernstein believes SpaceX's initiative is primarily about vertical integration and sees limited risk to Howmet. Citi has likewise called the decline a potential buying opportunity. Now, it remains to be seen whether SpaceX's ambitions represent a lasting threat to Howmet's growth story or if the selloff was just an overreaction.

Howmet Aerospace is a global provider of advanced engineered solutions serving the aerospace, defense, gas turbine and transportation industries. Headquartered in Pittsburgh, Pennsylvania, the company specializes in mission-critical engine components, fastening systems, airframe structural components, and forged aluminum wheels, with its technologies designed to improve aircraft and commercial vehicle performance and efficiency.