Baker Hughes closed at $60.81 on August 3, up 39% over twelve months and 13.6% below its 52-week high. The rating is Buy, though the reasoning has less to do with what the company earned last quarter than with what it has already sold.

What actually happened in the quarter? Industrial & Energy Technology booked $7.1 billion of orders in the three months to June, double the year-ago figure, on a book-to-bill ratio of 2.2 times. Remaining performance obligations rose 19% to a record $37.1 billion. Power systems accounted for $2.6 billion of that intake, of which $2.2 billion came from data centres, anchored by an award from Dynamis for 76 NovaLT16 turbines and a framework with Kodiak Gas Services covering up to 1.8 gigawatts. Management raised its three-year order target above $45 billion and committed to doubling gas turbine capacity by the end of 2028.

Then why does the income statement look so ordinary? Because almost none of it has converted yet. Group revenue fell 2% year over year to $6.74 billion, IET revenue was flat, and adjusted earnings per share of $0.64 grew 2%. On the earnings call, the chief financial officer confirmed that a meaningful portion of 2026 gas technology equipment orders will convert to revenue only after 2027. Shareholders are being asked to sit through several more quarters of impressive order headlines attached to unremarkable results.

Is the stock cheap? No. Following the $13.6 billion Chart Industries acquisition, which closed on July 16, the shares trade at roughly 12.5 times pro-forma EBITDA and 21.5 times forward earnings, against a five-year history nearer 8 to 10 times. A sum-of-the-parts valuation on 2027 estimates brackets the current price with a midpoint below it. Everything above the low $60s is effectively an option on 2028, priced fairly rather than generously. Worth noting too: most screeners still show an enterprise value near $59 billion, drawn from a June 30 balance sheet that held $15.7 billion of pre-funding for Chart. The correct figure is closer to $74 billion.

What would break the thesis? Concentration. Roughly a fifth of the record intake traced to data centre demand set by a handful of hyperscale buyers. Should that spending cycle enter a digestion phase, the contracted backlog survives but the growth rate the shares are capitalising resets abruptly. Leverage has also jumped from 0.1 times net debt to EBITDA to about 2.2 times, and buybacks have stopped entirely.

Full scenario analysis, scorecard and trade levels appear in the complete Baker Hughes (BKR) report on our Reports page.