Airlines and the hyperscalers have one thing in common: They are desperate for turbines to power their jets and data centers. At the heart of this surging demand are a few companies that manufacture the highly specialized parts.
Western production of these turbine blades and vanes is concentrated in four companies, according to a report from SemiAnalysis. They are publicly listed Howmet Aerospace, Berkshire Hathaway-owned Precision Castparts, private-equity-owned Consolidated Precision Products and DPC Holdings, the parent of U.K.-based Doncasters Group, which made its public-market debut in New York last month. Precision Castparts and Howmet have the biggest market shares.
As with other industries overcome by artificial-intelligence euphoria, the main question is whether these companies might overbuild. The highly concentrated nature of the industry -- with only a handful of experienced players -- makes discipline more likely.
Turbine blades and vanes are "among the most demanding components modern industry makes," the SemiAnalysis report said. Each of the parts is created with a new wax mold that is made from scratch, according to Kristine Liwag, equity analyst at Morgan Stanley.
During Howmet's investor day earlier this year, Chief Executive John Plant illustrated why these parts are so challenging to make. During takeoff, jet engines must withstand temperatures exceeding 3,000 degrees Fahrenheit, while enduring rapid rotations and intense pressure.
While technical standards for power turbines aren't as challenging, the technology involved in making those parts is similar. The power-turbine market hasn't been big enough to justify a new vertical of suppliers, according to Liwag.
These companies supply aircraft manufacturers such as Boeing and Airbus, aircraft-engine makers including GE Aerospace, Rolls-Royce and RTX's Pratt & Whitney and the power-turbine manufacturers GE Vernova, Siemens, Mitsubishi Heavy Industries and Caterpillar. They also supply parts for military aircraft, such as the F-35.
Historically, the industry has been vulnerable to cyclical demand. Aircraft production, for instance, plunged at the onset of the pandemic in 2020, when airlines delayed or canceled aircraft orders. Expanding revenue from the power sector and the less-cyclical defense industry should create some buffers.
Demand is currently surging for these blades and vanes. After two years of revenue declines in 2020 and 2021, Howmet's sales have grown by a double-digit percentage in each of the past four years. In the first quarter, sales to the commercial-aerospace industry rose 20% from a year earlier, while revenue from gas turbines -- the types used by data centers -- increased 39%. Howmet, which has said its market share of the gas-turbine market is over 50% globally, expects revenue from that segment to double in the next three to five years.
Precision Castparts' revenue from aerospace and gas-turbine power products increased 9.4% and 18.9%, respectively, in the first quarter compared with a year earlier. DPC's aerospace and gas-turbine revenue rose 43% and 29%, respectively, in the first quarter.
Wait times for aircraft run 10 years or longer. Heavy-duty power turbines are facing backlogs of as long as eight years, according to BloombergNEF. Smaller, aeroderivative turbines that are adapted from jet-engine designs can take 15 to 36 months.
The long backlogs are helping drive demand for these companies' spare-parts business. Airlines are forced to fly older planes for longer and need to keep buying spares. Spares are also in demand for gas turbines because the existing base is being run much harder than expected, Howmet's Plant said at a conference earlier this year. He described turbine blades as the "brake pads of the turbine industry," because they are the parts that wear out fastest. Overall, the spares business has ballooned to about 23% of Howmet's revenue, up from 11% in 2019.
Painful memories of prior busts should help limit overbuilding. DPC has posted net losses over the past two years and for the first quarter of 2026 because of the high interest it owes on a loan it took on in 2020 as part of a restructuring. The company plans to use its IPO proceeds to pay down the debt. Berkshire Hathaway took a $10 billion write-down for Precision Castparts in 2020. In an investor letter, Warren Buffett wrote that he paid too much for the company back in 2016.
Manufacturers are likely reluctant to make big investments because they "stand to lose the most if they follow an AI bubble off a cliff," the SemiAnalysis report said. That is because they "own the fixed costs of the cycle," said Nigel Chiang, analyst at SemiAnalysis. Chasing demand means ordering specialized vacuum furnaces on two-year-plus lead times, hiring and training people and building up expensive inventories of superalloys, Chiang said.
So far, they haven't announced massive expansions. Howmet has said it would step up capital expenditures to $500 million this year, a 10% increase from a year earlier. DPC, a smaller player, plans to spend $58 million over the next 12 months, up from $31 million in 2025. It has said that major customers would fund capacity expansions, with up to 80% of required capital investment.
Ken Herbert, equity analyst at RBC Capital Markets, said that expanding manufacturing capacity for these turbine components is "incredibly capital intensive" and that it can take time for new factories to produce a good yield of parts that are free of defects. A new factory line could be scrapping over 50% of its production for an extended period, he said. A fast increase in manufacturing could be limited by the supply chain for raw materials such as nickel, titanium, cobalt and vanadium, which are only found in a few regions of the world.
Liwag said excess capacity shouldn't be a problem for the industry before 2030. So far, airlines have been reluctant to cancel orders even during uncertainties such as the Iran war. "If you were to cancel your slot, you'd have to wait five or 10 years to get an incremental slot," she said.
Meanwhile, long backlogs in both aviation and the power industry should give these manufacturers room to raise prices. Higher pricing helped raise Howmet's operating margins to 25.5% last year from 16.6% in 2019.
There are just two publicly listed turbine-parts players. Howmet's shares have risen more than fivefold over the past three years, trading at 49 times forward earnings. That represents a premium over its customers such as GE Vernova and Rolls-Royce, though those two are also pricey at 40 and 35 times earnings, respectively. Loss-making DPC's stock has climbed 46% above its IPO price in the two weeks since its market debut.
The aviation and power-equipment businesses are cyclical, but they are on different cycles, and barriers to entry are high. As long as these specialized parts makers can keep charging higher prices and stay disciplined on production, investors should be willing to pay a premium for their shares.
Write to Jinjoo Lee at jinjoo.lee@wsj.com
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Siemens Energy produces power turbines. "Airlines and Hyperscalers Clamor for Turbines. Only a Few Companies Make the Parts," at 5:30 a.m. ET, incorrectly incorrectly referred to the company as Siemens.
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July 10, 2026 10:07 ET (14:07 GMT)
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