Baker Hughes Navigates Diverging Business Realities

Baker Hughes finds itself operating in two distinctly different worlds. The energy technology giant is experiencing a fundamental split in its operations, with its industrial and energy technology division achieving remarkable success while its traditional oilfield services unit faces significant headwinds. This strategic divergence is currently shaping market perceptions and the company's overall valuation.

The company's Industrial & Energy Technology (IET) segment has emerged as its primary growth engine, delivering exceptional financial results. The division reported a record order backlog of $32.1 billion, with quarterly revenue reaching $3.4 billion – representing a 15% year-over-year increase. Profitability metrics also showed strength, as the segment's EBITDA margin expanded to 18.8%.

Several key factors are driving this impressive performance:
* Secured over $800 million in new LNG contracts for major projects including Port Arthur Phase 2 and Rio Grande LNG
* Surging demand from artificial intelligence and data center operations, potentially accelerating the timeline to reach the $1.5 billion data center order target
* Additional momentum from geothermal projects and emerging energy sources

Oilfield Services Segment Faces Challenges

In contrast to the thriving IET business, Baker Hughes' Oilfield Services & Equipment (OFSE) division is confronting difficult market conditions. Despite recording a 16% increase in orders to $4.1 billion, the segment saw revenue decline by 8% to $3.6 billion. The EBITDA margin for OFSE contracted to 18.5%.

Should investors sell immediately? Or is it worth buying Baker Hughes a GE?

This performance gap reflects broader industry trends, with global oil expenditures projected to decline by high single-digit percentages through 2026. While IET positions itself for future energy transitions, OFSE must navigate cyclical industry pressures.

Strategic Focus on Gas Transition

CEO Lorenzo Simonelli has emphatically declared "This is the age of gas," highlighting the company's strategic commitment to energy transition technologies. The company forecasts global LNG capacity will reach 950 MTPA by 2035 and aims to secure at least $40 billion in IET orders over the coming three years.

The critical question remains whether the oilfield services business can maintain stability while the energy technology transformation gains full momentum. Recent quarterly results delivered a mixed message: adjusted earnings per share of $0.68 exceeded expectations, and total revenue advanced modestly to $7.0 billion. However, the company's share price continues to trade sideways, caught between these contrasting business narratives.

Baker Hughes' expansion strategy was reinforced by its $13.6 billion acquisition of Chart Industries, though near-term OFSE challenges continue to restrain immediate stock performance. Until the oil market environment becomes clearer by 2026, Baker Hughes will remain a company balancing two different time horizons.