Howmet Q3 2026: 29% Revenue Growth and $5B Buyback Signal Long-Term Upside

Howmet (HWM) reported third-quarter 2026 results on October 29, showcasing a 29% year-over-year revenue increase to $2.7 billion and raising its full-year outlook. The company attributed this strong performance to rapidly expanding demand for artificial intelligence data center power and commercial aircraft replacements, driving multiyear growth across gas turbines and engine components.

Management highlighted three key takeaways. First, data center power demand is accelerating industrial gas turbine (IGT) growth. Howmet now expects to double its IGT sales in three years instead of five, reaching $2.5 billion by the end of the decade. CEO John Plant noted that the impact will be felt beyond 2028, as new capacity is already sold out.

Second, commercial aerospace spares provide durable multiyear revenue support. Airlines are flying older aircraft longer, forcing more frequent maintenance, repair, and overhaul (MRO) engine shop visits. High passenger travel and new engine time-on-wing limits continue to push spare parts sales higher. Plant stated that spares demand will remain very robust, with the current aircraft order backlog ensuring new production continues through 2027 and beyond.

Third, expanding share buybacks and high cash flow conversion protect leverage. Howmet repurchased $500 million in stock during the quarter and expanded its buyback authorization by $5 billion. High free cash flow allows the company to fund growth projects without adding net debt. Plant emphasized that the entire IGT growth will be completed without adding any debt.

Looking ahead, Howmet is investing in seven new manufacturing plants to meet high operational demand across aerospace, defense, and power markets. Proprietary casting technologies and multiyear customer contracts protect long-term margins, while management plans to increase engineering staffing in 2027 to stay at the forefront of developments. Operational discipline and scale position the business to capture expanding power and aviation demand through 2030.

Howmet's impressive revenue growth and raised guidance are not just a one-quarter wonder; they signal a structural shift in demand that could benefit the company for years to come. The acceleration in industrial gas turbine sales, driven by AI data center power needs, is a multiyear trend that Howmet is uniquely positioned to capitalize on. With new capacity already sold out, the company has clear visibility into future revenue.

The commercial aerospace spares business adds another layer of durability. As airlines extend the life of older aircraft due to new plane delivery delays, the need for maintenance and spare parts remains high. This recurring revenue stream is less cyclical than new aircraft production and provides a steady cash flow foundation.

Howmet's ability to fund growth without taking on debt is a significant competitive advantage. The expanded $5 billion buyback authorization demonstrates management's confidence in the business and commitment to shareholder returns. High free cash flow conversion allows the company to invest in new plants and technology while still returning capital.

The investments in seven new manufacturing plants and increased engineering staffing show that Howmet is preparing for sustained growth. Proprietary technologies and long-term contracts with customers create barriers to entry and protect margins. As demand for power and aviation continues to rise, Howmet's scale and operational discipline should enable it to capture a significant share of the expanding market.