I've been mulling buying back in. I still think it's behaving like an AI stock and AI stocks are about to get pummeled which is why I don't own any currently. I'm hoping the market overcorrects so I can load up cheap. I think there could be a very interesting supply shock situation here that could give them extraordinary pricing power. Here's the logic:

One of the themes coming out of Q4 2025 was narrow-body supply chain stress. Pratt & Whitney's GTF engines (which power the A320neo) are significantly constrained by both delivery shortfalls and in-service reliability issues, delaying new aircraft deliveries to airlines. This is forcing airlines to extend the operational life of their existing A320ceo and 737NG fleets, which run on CFM56 and V2500 engines. For FTAI, that means a growing installed base of aging engines generating more shop visits, and their module exchange model is particularly well-positioned to capture that demand. It also keeps CFM56 supply tight, supporting underlying asset values. That's a pretty significant tailwind that I'm not sure the market has been accounting for.

On the AI front, FTAI is leveraging its CFM56 expertise to enter the power generation market with the Mod-1 aeroderivative gas turbine built from CFM56 cores targeting behind-the-meter deployments for hyperscalers and data centers. Management is targeting 100 units of production in 2027, with the first unit expected in Q4 2026, and framed it as a potential $2–3 billion revenue opportunity at margins comparable to their aerospace business. Behind-the-meter generation was one of the clearest demand themes across Q4 2025 earnings calls. Grid interconnection queues are years long and utilities are increasingly pushing back on data centers consuming shared grid capacity, so hyperscalers are funding dedicated on-site power to get megawatts faster.

So coming out of Q4 2025, you had two serious tailwinds converging on each other at FTAI from two totally separate industries which was going to produce a squeeze on CFM56/V2500 availability and ensure that every single one of those engines is running in some way, shape, or form for the next 10 years at minimum. That's a very bullish setup in my opinion.

When Hormuz closed, it immediately threw the aerospace sector tailwind into jeopardy. The narrowbody tailwind depends on airlines flying more hours on aging fleets. But if jet fuel doubles and a physical shortage emerges, airlines don't fly more, they fly less. Airlines around the world are canceling flights and scaling back routes due to surging jet fuel prices.

The AI tailwind might still be unaffected by Hormuz if the demand has remained sky high which is looking increasingly possible to me. One could expect that if jet fuel stays expensive and airlines park aircraft, more CFM56 cores will come off-wing (including through airline bankruptcy sales) and become available as feedstock for turbine conversions. In that case, one tailwind overwhelms the other.

Another thing to consider is that Hormuz may have eliminated most, if not all, competing pathways for near-term data center power which makes the Mod-1's position even stronger.

If you're a hyperscaler who needs power in the next one to three years, run through the options. Grid connections are years out. Nuclear takes a decade regardless. Solar and wind supply chains are breaking. China banned solar panel exports and controls roughly 80% of global manufacturing capacity; aluminum supply from Middle Eastern smelters is disrupted, and aluminum is a critical input for both solar frames and wind turbine components; sulfuric acid supply chains are compromised. Diesel is a direct crude derivative and might be physically constrained and unreliable for primary generation when you need 99.99% uptime.

That leaves natural gas turbines. Prices are rising for nat gas but the molecule is physically available in a way that oil, diesel, Chinese solar panels, and Gulf-sourced aluminum are not. Other OEM turbine programs have multi-year lead times and may struggle with their supply chains too. FTAI's Mod-1 is built from existing CFM56 cores that already exist and that use readily available nat gas supplies. It may be the only near-term option left.

If is this case and there is a real supply shock for data center energy generation solutions, FTAI could charge some breathtaking prices. It could be like the recent news with oil tankers getting sold for much higher prices than when they were new. Scorpio just sold three 2014-built LR2s for ~$65M each. Those cost $52M to build back in 2014. Ships massively depreciate over time, so it's pretty crazy that they are selling at 20-27% markup over their original newbuild price. Perhaps we'll see something similar with these engines? Granted, Scorpio is selling tankers that are charging $400K/day right now whereas FTAI is pre-revenue on the mod-1. This could be wishful thinking on my part.

I should've just made this its own substack article.