Baker Hughes Company

BKR · NASDAQ · USD

Can Baker Hughes keep converting power and gas infrastructure demand into record orders, margins and cash flow fast enough to offset falling oilfield spending and Middle East disruption?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Power systems order growth

    The 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 backlog

    Industrial 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 flow

    Management 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.

  • Chart integration synergies

    Chart adds thermal management and cryogenic equipment and is expected to bring cost and sales synergies that make earnings steadier and less tied to drilling.

Bear case

  • Upstream spending decline

    The 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 conversion

    Record 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 disruption

    Conflict 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.

  • Integration and leverage risk

    Closing Chart turns a net cash balance sheet into debt and depends on delivering promised cost cuts while integrating a large new reporting segment.

Bull and bear points

Growth & Execution

In short: IET orders and backlog keep setting records, while oilfield services faces falling operator spending.

Bull · 2

  • IET orders doubled year over year to a record

    Orders came in far above revenue, pushing the order backlog to an all-time high and giving Baker Hughes visibility into sales and later service work well beyond this year.

    Q2 FY2026 call

  • Horizon Two order target raised to $45 billion

    A year ago management was aiming at $40 billion of IET orders over three years; it now expects more than $45 billion, citing power, LNG and gas infrastructure demand.

    Tone shiftQ4 FY2025 → Q2 FY2026
Bear · 2

  • Gas technology orders convert to revenue slowly

    Management says a meaningful part of the gas technology equipment order mix converts after 2027, so even record bookings leave near-term revenue and profit largely unchanged.

    Q2 FY2026 call

  • Oilfield services revenue falls as operators spend less

    OFSE revenue fell 4.6% year on year to $3.5 billion and management expects global upstream spending to decline again in 2026, so the smaller half of the company keeps shrinking.

    Q2 FY2026 call

Profitability & Financial Strength

In short: Margins and free cash flow are improving, while tariffs and Chart-related debt add cost pressure.

Bull · 1

  • Free cash flow rose and the balance sheet holds net cash

    Free cash flow reached $3.1 billion over the past year and the company moved from net debt to a net cash position before the Chart deal, giving it room to fund the purchase.

    Filed financials
Bear · 2

  • Tariffs and freight costs pressure oilfield services margins

    Higher tariff costs carried into 2026 and Middle East logistics expenses weigh on OFSE margins, offsetting part of the cost-out savings management is counting on.

    Q4 FY2025 call

  • Chart deal adds debt and requires synergy delivery

    Buying Chart moves the balance sheet from net cash to net debt, and the plan to return to target leverage relies on cost synergies and further asset sales going to plan.

    Q2 FY2026 call

Market Position

In short: Baker Hughes is sold out of key turbines but depends on GE suppliers and a disrupted Middle East region.

Bull · 2

  • NovaLT delivery slots are sold out through 2028

    Demand for the NovaLT industrial turbine exceeds manufacturing capacity, so Baker Hughes can choose which orders to take and hold price on new units and future service slots.

    Q4 FY2025 call

  • Growing installed base supports recurring service revenue

    Every turbine and compressor sold adds to an installed base that feeds long-term service agreements and digital monitoring, which carry higher margins than the original equipment.

    Q3 FY2025 call
Bear · 3

  • Aeroderivative turbines depend on GE Vernova and GE Aerospace

    Baker Hughes sources aeroderivative equipment and runs a joint venture with GE Vernova and GE Aerospace, so a supply or partnership breakdown would hit a fast-growing product line.

    10-K, filed 2026-02-05

  • Assumed Middle East recovery has slipped to year-end

    A quarter ago guidance assumed the Strait of Hormuz would reopen and regional activity would recover in the second half; guidance now assumes current activity levels persist through year-end.

    Tone shiftQ1 FY2026 → Q2 FY2026

  • Upstream revenue fell by a third in the last oil downturn

    Revenue dropped 31.8% between FY2014 and FY2016 and the operating margin fell from 13.1% to 3.5%, showing how hard an upstream spending cycle still hits the business.

    Filed financials