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SLB
FY2026 Q1
Improving
SLB Limited Common Shares earnings call
Buzzberg read
Middle East conflicts cause revenue and earnings decline in Q1
SLB's Q1 2026 was disrupted by the Middle East conflict, with revenue down 10.5% sequentially and margins compressed. Management sees a gradual recovery starting in Q2 and a strong long-term demand cycle driven by energy security, higher oil prices, and the need to replenish lost production. Digital, data centers, and production recovery are strategic growth pillars. Middle East conflict caused ~$200M revenue shortfall in Q1; recovery expected to be gradual with an incremental 6-8c EPS headwind in Q2 partially offset by international growth.
Buzzberg read Middle East conflicts cause revenue and earnings decline in Q1 SLB's Q1 2026 was disrupted by the Middle East conflict, with revenue down 10.5% sequentially and margins compressed. Management sees a gradual recovery starting in Q2 and a strong long-term demand cycle driven by energy security, higher oil prices, and the need to replenish lost production. Digital, data centers, and production recovery are strategic growth pillars. Middle East conflict caused ~$200M revenue shortfall in Q1; recovery expected to be gradual with an incremental 6-8c EPS headwind in Q2 partially offset by international growth. Read full analysisCollapse analysis
SLB's Q1 2026 was disrupted by the Middle East conflict, with revenue down 10.5% sequentially and margins compressed. Management sees a gradual recovery starting in Q2 and a strong long-term demand cycle driven by energy security, higher oil prices, and the need to replenish lost production. Digital, data centers, and production recovery are strategic growth pillars. Middle East conflict caused ~$200M revenue shortfall in Q1; recovery expected to be gradual with an incremental 6-8c EPS headwind in Q2 partially offset by international growth.
- Data center solutions grew 45% YoY, on track to $1B run rate by year-end 2026; new NVIDIA design partnership signals expanding scope.
- Digital revenue up 9% YoY; annual recurring revenue reached $1.02B; management expects full-year 35% EBITDA margin.
- Production recovery and ChampionX integration are performing well, with ChampionX margins accretive to SLB in Q1.
Revenue$8.721B-11% QoQ
EPS$0.52-33% QoQ
Gross margin15.26%Reported
Operating margin11.8%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Macro
Expects oil prices to settle above pre-conflict baseline
Data Centers
Data center solutions grew 45% year-on-year
Show 3 more callouts
AI
Automated footage drilling increased 145% year-on-year
Data Centers
Data center run rate exit year at $1 billion
Guidance
Q2 earnings impacted by incremental Middle East costs
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $8.721B | -11% QoQ |
| EPS | $0.52 | -33% QoQ |
| Gross margin | 15.26% | Reported |
| Operating margin | 11.8% | Reported |
| Free cash flow | $0.144B | Reported |
| Capex | $0.343B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | $2.5B | $2.5B | Guided |
AI, capex & demand read
Management read
Measured
Management acknowledged significant near-term challenges from Middle East disruptions and cost pressures, but expressed confidence in the long-term investment cycle and strategic growth areas like digital and data centers.
Management AI read
Management emphasized strong momentum in digital and AI, citing 145% growth in automated footage drilling year-on-year and a new partnership with NVIDIA for DSX AI factories, with data center solutions growing 45% year-on-year. They see AI as a key driver of differentiation and long-term value creation, with digital expected to become an increasing contributor to growth.
Investment and capacity
Management maintained full-year capital investments guidance of approximately $2.5 billion, with no material adjustments to the cost base despite Middle East disruptions. They continue to invest in digital, data center solutions, and production recovery to drive long-term growth.
all 4 named companies below
Companiesreturns since call
Customers
Customers
Olivier Lepuche
SLB was selected by NVIDIA as a modular design partner for DSX AI factories, indicating NVIDIA is moving to modular, offsite-manufactured infrastructure to accelerate its AI factory build-out for the Rubin/Vera generation. — NVIDIA's reliance on modular partners could shorten deployment timelines and reduce construction risk for its AI data centers, potentially boosting hardware demand and capex efficiency.
Evidence
“As you saw with our recent announcement to serve as a modular design partner for NVIDIA DSX AI factories.”
Customers
Olivier Lepuche
SLB is deepening its subsea lifecycle services relationship with Equinor, indicating sustained long-cycle investment in the Norwegian Continental Shelf.
Evidence
“We have seen one more announcement that we are continuing to innovate and to enhance the project we have in Goldfax with Equinor in Norway.”
Customers
Olivier Lepuche
BP is collaborating with SLB on integrated subsea projects, aligning with BP's strategy to enhance deepwater recovery and production efficiency.
Evidence
“this is through with the partner we have with Equinor and with BP.”
Partners
Partners
Olivier Lepuche
S&P Global Energy is divesting its upstream petrotechnical software suite, signaling a strategic pivot away from direct software competition and opening an opportunity for SLB to expand in North American unconventional workflows.
Evidence
“we have come to an agreement with S&P Global Energy to acquire, actually, their upstream petrotechnical software suite.”
External signals
Supply-chain alpha · 1returns since call
SLB was selected by NVIDIA as a modular design partner for DSX AI factories, indicating NVIDIA is moving to modular, offsite-manufactured infrastructure to accelerate its AI factory build-out for the Rubin/Vera generation.
Evidence
“NVIDIA has chosen us, has selected us as their design partner for the DSX AI factory.”
Methodology & coverage
Management-only analysis. All 4 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.