Slb N.V. (SLB) | The Buildout — AI Infrastructure

The Verdict

SLB sells the technology and services used to find, drill, complete and produce oil and gas, and it is now selling modular cooling and power infrastructure into data centers. That second piece is the AI linkage: factory-built modules, plus design, engineering and systems integration work, running on the same manufacturing and process-engineering base the company built for energy. Its Digital segment sells AI-embedded software into oil and gas workflows, where the demand driver is upstream spending rather than data center construction. The two linkages are different businesses and should not be read as one.

Earnings Beat

SLB reported second-quarter 2026 revenue of $8,972M, up 3% sequentially and 5% year over year, with gross margin of 15.5%, down from 18.9% a year earlier. Revenue had fallen 10.5% sequentially in the first quarter after Middle East disruptions; management said strength in Latin America, Europe and Africa, U.S. land and Asia more than offset the Middle East decline. The largest division, Production Systems, grew 7% sequentially to $3.8B, with its pretax margin up 138 basis points and its adjusted EBITDA margin back above 20%.

Management tone: Management's framing shifted between the April and July calls. In April the language was "a challenging start to the year," with Middle East operations on standby; in July the CEO said "the market is starting to exhibit the characteristics of an upcycle" and the company raised its data center run-rate target rather than merely restating it. The same call paired the stronger language with a quantified downside scenario and the chief financial officer's statement that the data center business is not accretive to overall margins. Asked on both calls about a 2027 revenue run rate, management declined to give a number.

Management Guidance

For the third quarter of 2026, management guides global sequential revenue growth of 3% to 4% with adjusted EBITDA margin expansion of approximately 75 basis points; core divisions are expected to grow sequentially in the low to mid-single digits, with Digital in the low single digits. A downside scenario — flat sequential Middle East revenue — would take approximately $150M off revenue and approximately $75M off adjusted EBITDA, landing primarily in Well Construction and Reservoir Performance. For the fourth quarter, the guide assumes Middle East activity of $2.1B to $2.2B, approximately 95% of fourth-quarter 2025 revenue, revenue surpassing $10B (approximately 5% growth year over year) and an adjusted EBITDA margin of approximately 24%, which management describes as in line with the fourth quarter of last year. For the full year, capital investments of approximately $2.5B, share repurchases of a minimum $2.4B and total shareholder returns of more than $4B were reaffirmed.

Trajectory

Revenue ran $8,928M in the third quarter of 2025, $9,745M in the fourth, then $8,721M in the first quarter of 2026 as Middle East disruption hit, recovering to $8,972M in the second. Reported figures read the revenue trajectory as accelerating and margins as compressing: gross margin was 15.5% in the second quarter against 18.9% a year earlier, and EBITDA margin on the same basis was 19.9% against 23.1%. Management attributes the margin path to the Middle East disruption and to mix — Digital carries roughly 35% adjusted EBITDA margins, the core divisions run in the mid-teens on a pretax basis, and the fastest-growing data center business sits below the corporate average. The third-quarter guide of about 75 basis points of margin expansion points the sequence back up.

The Model

The model projects FY+1 revenue of $37,229M with EBITDA of $8,153M (21.9%), and FY+2 revenue of $40,958M with EBITDA of $9,707M (23.7%). The near-term figure sits against the anchors the source material provides: management's quantified fourth-quarter 2026 exit frame (revenue and adjusted EBITDA margin), its Middle East recovery assumption for the fourth quarter, and the full-year capital-investment plan. FY+2 rests on the data center business scaling toward the raised out-year run-rate target, the roughly 30% step-up in long-cycle project approvals converting into bookings and work, and Digital continuing at its current growth rate.

Projections are the median of 5 independent model runs. The model’s revenue sits 3.3% above analyst consensus.

For the third quarter of 2026, management guides global sequential revenue growth of 3% to 4% with adjusted EBITDA margin expansion of approximately 75 basis points; core divisions are expected to grow sequentially in the low to mid-single digits, with Digital in the low single digits. A downside scenario — flat sequential Middle East revenue — would take approximately $150M off revenue and approximately $75M off adjusted EBITDA, landing primarily in Well Construction and Reservoir Performance. For the fourth quarter, the guide assumes Middle East activity of $2.1B to $2.2B, approximately 95% of fourth-quarter 2025 revenue, revenue surpassing $10B (approximately 5% growth year over year) and an adjusted EBITDA margin of approximately 24%, which management describes as in line with the fourth quarter of last year. For the full year, capital investments of approximately $2.5B, share repurchases of a minimum $2.4B and total shareholder returns of more than $4B were reaffirmed.

What Could Go Right — and Wrong

Looking Ahead

Over the next twelve months the verification points are mostly operational. The third quarter tests the 3%-4% sequential revenue guide and the roughly 75 basis points of margin expansion; the fourth quarter tests the revenue step-up and a roughly 24% adjusted EBITDA margin, both of which rest on Middle East activity returning to about 95% of fourth-quarter 2025 levels. Alongside those, the company has committed to closing and integrating Kelvion, executing its capital-investment and buyback commitments, and lifting OneSubsea margins gradually through the second half while bookings accumulate toward the two-year ambition.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

SLB reports four segments: Digital, Reservoir Performance, Well Construction and Production Systems. Together they sell the technology and services used to find, drill, complete and produce oil and gas, to national oil companies, large integrated oil companies and independent operators, in more than 100 countries. The AI buildout reaches the company in two different ways. Data Center Solutions — which is not a reporting segment — manufactures modular, off-site-built cooling and power equipment for hyperscale data centers and is moving into design, engineering and systems integration; SLB was selected as NVIDIA's modular design partner for DSX AI factories and is working on a gigawatt-scale data center in Canada for Meta. Separately, the Digital segment sells AI-embedded software into oil and gas workflows, where the end-demand driver is upstream spending rather than data center construction.

The company operates a large off-site manufacturing base — a 3.5 million square foot former GM facility in Shreveport, Louisiana, now fully leased according to the watch-event log — and says it has delivered 1.3 gigawatts of equipment capacity across more than 20 or 30 data centers from a single manufacturing site, though the source does not name that site in the same sentence. Subsea production systems sit inside a joint venture, SLB OneSubsea, and ChampionX, acquired in July 2025, sits inside Production Systems and has posted sequential margin expansion for three consecutive quarters. Capital investments are guided at about $2.5B for 2026, and the company marks its 100-year anniversary in 2026.

Business Segments

Competitive Landscape

The competitive picture has two layers. In oilfield services the source names Baker Hughes, Halliburton, Weatherford, Petrofac and Patterson-UTI, and Baker Hughes is the one with a detailed read-through: it expects Middle East activity broadly unchanged through year-end and says its own OFSC Middle East revenue is down 10% from the fourth quarter of 2025, against SLB's assumption of about 95% of that quarter. In data center power and cooling the source names Eaton, Schneider Electric, Vertiv and Halliburton; two of those, Vertiv and Eaton, also appear as suppliers to SLB's data center business, a collaborate-and-compete relationship. Management describes SLB as having a unique portfolio in subsea processing with no match in the market.

Supply Chain

SLB buys components, chemicals and services for oilfield work and for its modular data-center build, and sells to national oil companies, majors, independents and now hyperscalers. Only six of the source map's relationships are quote-backed; the rest are lower-confidence.