FTAI stock just hit an all-time high. Not because of earnings. Not because of cash flow. Because of a press release. FTAI announced FTAI Power. This is a plan to convert jet engines into turbines for data centers. But here is the reality. There are no signed customers. No turbines shipped. Production is expected to start in 2026. The stock added roughly $3 billion in market cap. Before a single megawatt was generated. That rally came on top of an existing controversy. Muddy Waters alleges that about 80% of FTAI's aerospace earnings come from one-time asset sales. Not recurring maintenance revenue. FTAI's audit committee reviewed the accounting. They said it passed. But being legal and being sustainable are two very different things.
The Valuation Gap
Here is what investors are paying for this story. Investors are paying a multiple of 12X sales. The industry average is closer to 1.2X. That is not a premium. That is a re-rating. A multiple like that assumes durable growth. Real operational growth. Muddy Waters argues something else. They claim engines are depreciated in the Leasing segment. Then moved into Inventory. Then sold in a way that resembles maintenance revenue. On paper, the margin looks like a moat. In practice, it may be a mirror. The filings can be compliant. The earnings can still be non-recurring.
Cannibalization Risk
Now let us add a second risk. Every CFM56 engine converted into a 25 megawatt turbine is one less engine available for FTAI's core MRO business. And the CFM56 matters. It is one of the most widely used jet engines in aviation history. Supply is tightening. Airlines are extending the life of older aircraft. Demand for parts is rising. Those parts drive FTAI's highest margins. So the power pivot is not automatically a hedge. It can become a trade. Stable aviation revenue traded for speculative power revenue.
The AI Halo Effect
This is where the label takes over. Wall Street repriced FTAI as a data center company. Before a single turbine existed. But adding AI to a press release does not change the physics. For comparison, GE Vernova ships turbines in the 48 megawatt class. With roughly 40 million operating hours of track record. FTAI is targeting smaller units. New configurations. A 2026 timeline. And even if the turbine works, data centers still need interconnection. Pipelines. Grid synchronization. Full engineering and construction. If FTAI sells hardware only, it enters a commodity race. If it delivers the full solution, capital requirements expand sharply. That is not always what the current valuation reflects.
Liquidity Versus Fundamentals
So why does the stock keep rising? Because price is not always fundamentals. Index inclusion matters. Passive flows matter. Mechanical buying can overpower fundamental shorts. In that environment, the AI halo is driven by allocation. Not conviction. So the question is not whether fraud occurred. The audit review says no. The real question is simpler. Does the valuation assume execution that has not happened yet? Class action lawsuits remain pending. The core business remains unchanged.
Markets price hope before proof. Strong investors separate press releases from production. Labels from leverage. FTAI may deliver everything it promises. But the multiple suggests the market is already paying as if it has. Understanding what you actually own, not what you are promised, is how you avoid paying for futures that never arrive.