Baker Hughes Company
Analysis
Baker Hughes is no longer really an oilfield services company. Its equipment arm is booking record orders while total revenue barely moves, and closing that gap is now the whole investment case. How much bigger is the industrial side than oilfield services today?
- Orders are exploding while revenue stands still.
IET booked a record $7.1 billion in Q2 FY2026 and targets $45 billion across Horizon 2, yet segment revenue was flat. Much of it converts after 2027. When does the equipment backlog reach revenue?
- Power is becoming the company's growth engine.
Power Systems orders in the first half of 2026 already passed all of last year, led by data centers. Baker Hughes is doubling turbine and generator capacity, which it says could carry roughly $5 billion of revenue a year by 2029.
- The old oilfield business is shrinking, and it funds the bet.
OFSE revenue fell about 8% in 2025 and the Middle East conflict has taken 20% of world LNG capacity offline. Management assumes recovery only once the Strait of Hormuz reopens. Which OFSE regions are still growing?
- Power systems order growthThe bull case rests on data center and electrification power demand driving several years of gas turbine, generator and grid equipment orders for Baker Hughes.
- Record IET order backlogIndustrial and Energy Technology orders keep running ahead of revenue, so the order backlog keeps growing and gives the company visibility into future sales and services.
- Margin expansion and cash flowManagement expects higher-margin backlog, growing service work and cost cuts to keep lifting margins and cash flow, which then helps pay for the Chart acquisition.
- Upstream spending declineThe bear case is that oilfield services revenue follows operator spending, which keeps falling, so a shrinking part of the company offsets the growing equipment orders.
- Slow equipment order conversionRecord equipment orders turn into revenue slowly, and management says a meaningful part of the gas technology backlog converts after next year, so sales lag orders.
- Middle East disruptionConflict in the Middle East and the closure of the Strait of Hormuz have cut activity, raised freight costs and pushed management's expected recovery to the end of the year.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 24 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Jul 23 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | Jun 12 | Aug 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | May 11 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 23 | May 13 |
Congressional trading data provided by QuiverQuant
How Baker Hughes Company turned $27.7B of revenue into $3.3B of operating income.
| Revenue | ||
|---|---|---|
| Oilfield Services And Equipment | $14.3B | ▼ 8.34% YoY |
| Industrial And Energy Technology | $13.4B | ▲ 9.90% YoY |
| Total revenue | $27.7B | |
| Gross profit | $6.5B | 23.6% |
| Operating income | $3.3B | 12.1% |