Baker Hughes Company (NASDAQ:BKR) shares jumped more than 6% after the company beat second-quarter profit estimates and posted record orders, even as it warned that oil and gas producers will spend modestly less this year. Earnings per share came in at 64 cents, well above the 50 cents analysts expected, according to LSEG data.
Why Record Orders and a Spending Warning Came in the Same Breath
The quarter told two different stories at once. Orders rose 49% from a year earlier to a record $10.5 billion, including a record $7.1 billion for its industrial and energy technology (IET) segment. It is part of Baker Hughes that serves LNG, power generation, and data centers. Backlog rose 19% to an all-time high, and remaining contracted work hit $40.1 billion.
At the same time, the company said annual global spending by oil and gas producers will decline modestly this year, with weaker spending in Europe and the Middle East offsetting growth in Latin America, offshore Africa, and North America. Ongoing conflict between the U.S. and Iran has made producers more cautious. CEO Lorenzo Simonelli has been framing the firm’s strategy around what he calls a “demand decade for energy,” pushing Baker Hughes further into power grids, LNG, and data centers, beyond traditional oilfield services.
This makes you wonder: is Baker Hughes’ pivot into LNG, power, and data centers a big enough growth engine to outweigh a slowing oil and gas market?
The Bull Case
The turn toward LNG, power grids, and data centers is paying off. Baker Hughes Company (NASDAQ:BKR) just landed a major order from LNG producer Venture Global to manufacture 12 LNG trains for its proposed CP2 expansion. It is expanding its gas turbine and generator capacity, which it expects to bring online by 2029 and says could support nearly $5 billion a year in power systems revenue. It also raised its full-year order guidance under its Horizon 2 growth plan to more than $45 billion. Operating cash flow more than doubled from a year earlier to $1.35 billion, and free cash flow jumped to $1.11 billion from just $239 million.
The Bear Case
Baker Hughes Company (NASDAQ:BKR) expects the Middle East conflict to cut IET segment revenue by 1% to 2%. The firm’s own third-quarter revenue forecast for that segment, between $3.17 billion and $3.47 billion, falls short of the $3.79 billion analysts expected. Baker Hughes also flagged rising logistics and inflation costs at its regional facilities because of the disruptions.
Insider Monkey’s Hedge Fund Data
Insider Monkey’s hedge fund database shows Baker Hughes Company (NASDAQ:BKR) had 72 hedge fund holders as of Q1 2026, up sharply from 59 the quarter before. The dollar value held also jumped, from about $797 million to roughly $1.62 billion, showing hedge funds were adding to the stock even before this earnings beat. Among oilfield services peers, Halliburton also had 72 holders, up from 53, and SLB had 74, up from 73. Baker Hughes sits right in the middle of that group.
Conclusion
Baker Hughes Company (NASDAQ:BKR) is proving it can grow through an oil and gas slowdown by leaning on LNG and power infrastructure. However, the Middle East conflict remains a real, quantified drag on its most important growth segment, not just background noise.
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Disclosure: None. This article is originally published at Insider Monkey.
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