SLB’s CEO Calls the Turn: Oil Services Upcycle Is Taking Shape, but the Recovery Still Needs Proof
Wall Street spent most of July preparing for a rough quarter from SLB N.V. (SLB), the oilfield services heavyweight formerly known as Schlumberger. Fighting in the Middle East had shut in wells, and crude prices were softening as U.S.-Iran peace talks dragged on. At least six brokers cut their price targets ahead of the report.
Then the world’s largest oilfield services company reported, and its stock surged about 11% on Friday, July 24.
SLB’s earnings beat expectations — adjusted earnings of 55 cents a share, four cents above the Wall Street consensus of 51 cents. That alone moved the shares. But the phrase investors kept circling back to came from Chief Executive Olivier Le Peuch on the earnings call.
“The market is starting to exhibit the characteristics of an upcycle,” Le Peuch told analysts, according to Investing.com.
In oil services, that loaded phrase signals a shift from cautious, short-cycle spending to long-term capital commitments on multi-year projects — exactly the kind that keep a company like SLB busy for years, not quarters.
Background: Why an Upcycle Matters Now
The oilfield services sector has been stuck in a stop-and-go pattern since the pandemic-era crash, with operators favoring pay-as-you-go programs over large-scale developments. An upcycle, by contrast, involves front-end loading of capital for offshore fields, deepwater drilling and subsea infrastructure — all high-margin, high-duration work for companies like SLB.
Le Peuch backed his claim with a forward-looking metric that matters more than any single quarter’s results. He said final investment decisions on long-cycle projects — the formal green light operators give before spending billions — are set to jump about 30% year over year in 2026.
For SLB, more sanctioned projects mean more contracts for drilling, subsea equipment and production services. The company’s Top 10 customers have already signaled they plan to raise capital spending on offshore and deepwater plays, according to the CEO.
The Driver: Energy Security, Not Crude Prices
What makes this turn notable is what Le Peuch says is fueling it. It isn’t a spike in crude prices.
He cited energy security as the primary catalyst. Regional conflict has pushed operators to diversify their investment across more countries rather than concentrate it, as Bloomberg reported. Le Peuch framed the same idea to Fortune, tying the pivot to a world that now prizes reliable supply over cheap globalized supply.
That distinction is why SLB shares climbed even as oil softened. The company is telling investors its growth now rests on where the world wants its barrels produced — and that map is being redrawn in favor of deepwater, exploration and domestic capacity.
The Numbers Behind the Message
Total revenue reached $8.97 billion, up 3% from the prior quarter, per SLB’s earnings release. Middle East revenue dropped 13% as conflict disrupted operations, but growth everywhere else more than filled the hole.
One caution for readers reading the top line: that 5% year-over-year revenue gain leans heavily on the ChampionX acquisition SLB completed in early 2025. Strip out the acquisition and revenue actually fell 5% from a year earlier. The underlying business is turning, but it has not yet fully recovered from the downturn.
The AI Wildcard: Data Centers Outpace Oil
The fastest-growing corner of SLB now has almost nothing to do with oil.
Its Data Center Solutions unit, which builds modular infrastructure for AI facilities, grew 33% from the prior quarter. Revenue in the first half was up 63% from a year earlier. Le Peuch expects the business to exceed a $1 billion annualized revenue run rate by the end of 2026 and top $2 billion as the company exits 2027.
SLB also confirmed it was selected as a delivery partner for a new 1-gigawatt Meta data center in Alberta, Canada. For investors, this is a growth story that does not depend on drilling budgets or Middle East peace talks — tying SLB to the faster-moving AI spending wave.
Risks and What Comes Next
A CEO calling the bottom is not the same as a recovery arriving. Several things still need to fall into place.
SLB gave itself some near-term cover. It guided for third-quarter revenue to grow 3% to 4% sequentially and fourth-quarter revenue to exceed $10 billion, Benzinga noted. However, that assumes the Middle East continues to recover from conflict disruptions.
Even after Friday’s jump, SLB trades below where analysts think it belongs. The stock closed around $52 after the report. The average analyst price target sits at $61.82, with a consensus Buy rating across 18 analysts.
The company is also returning cash while it waits for the cycle to turn. SLB generated $716 million in free cash flow during the quarter, repurchased $648 million in shares, and its board approved a quarterly dividend of 29.5 cents a share.
The Bottom Line
SLB’s CEO is telling investors the industry is entering a multi-year expansion built on energy security and offshore drilling, with an AI data-center business layered on top. The quarter behind that message was still weaker than a year ago once you strip out the acquisition, so the bull case rests on the forecast holding rather than on results already in the bank.
For anyone watching the stock, the next two quarters of Middle East recovery and project orders will show whether Le Peuch called the turn early or called it wrong.
This story was originally published by TheStreet on July 27, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.