Howmet: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 29, 2026, Howmet (NYSE:HWM) announced a 29% year-over-year revenue increase to $2.7 billion and raised its full-year outlook. Rapidly expanding demand for artificial intelligence data center power and commercial aircraft replacements is driving multiyear growth across gas turbines and engine components. This backlog gives the company multiyear earnings visibility and expanding profit margins.

Three key takeaways from management's comments highlight the road ahead.

1. Data Center Power Demand Accelerates Industrial Gas Turbine Growth

Rapid data center expansion has created an urgent need for electrical power, driving high demand for land-based industrial gas turbines (IGT). Management now expects to double its IGT sales in three years instead of five, reaching $2.5 billion by the end of the decade.

This impact is likely to be felt in the outer years beyond 2028, since the new capacity currently being installed is totally sold out.
-- John Plant, Executive Chairman and Chief Executive Officer

2. Commercial Aerospace Spares Provide Durable Multiyear Revenue Support

Airlines are flying older aircraft longer while waiting for new commercial planes, forcing more frequent maintenance, repair, and overhaul (MRO) engine shop visits. High passenger travel and new engine time-on-wing limits continue to push commercial aerospace spare parts sales higher.

This means that spares demand will continue to be very robust. The current extraordinary aircraft OE order backlog will ensure that new aircraft production continues and increases throughout 2027 and beyond.
-- John Plant, Executive Chairman and Chief Executive Officer

3. Expanding Share Buybacks and High Cash Flow Conversion Protect Leverage

Howmet repurchased $500 million in stock during the third quarter and expanded its share buyback authorization by $5 billion. High free cash flow, or cash left after operating expenses and capital investments, allows the company to fund growth projects without adding net debt.

Most importantly, the whole of the IGT growth serving broad-based demand across industrial, oil and gas, as well as data centers, will be completed without adding any debt to the company.
-- John Plant, Executive Chairman and Chief Executive Officer

Looking Ahead

High operational demand across aerospace, defense, and power markets is straining production capacity, prompting investments in seven new manufacturing plants. Proprietary casting technologies and multiyear customer contracts protect long-term margins, while management strategically tracks facility capacity and contract definitization.

We're going to increase our engineering staffing again in 2027 by a similar number that we did in 2025 and 2026, as an example, to keep ourselves at the forefront of all the developments.
-- John Plant, Executive Chairman and Chief Executive Officer

Operational discipline and scale position the business to capture expanding power and aviation demand through 2030.

We see growth in both commercial aero and IGT as we go into the next decade.
-- John Plant, Executive Chairman and Chief Executive Officer

The Motley Fool has positions in and recommends Howmet Aerospace. The Motley Fool has a disclosure policy.