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AI’s Power Crunch Fuels a Pivot for These 2 Oilfield Stocks
Authored by Jeffrey Neal Johnson. Originally Published: 7/16/2026.
Key Points
- SLB and Liberty Energy are forming a strategic alliance to provide modular infrastructure and power generation for data centers.
- Behind-the-meter power could help data center developers move faster when grid interconnection timelines are too long.
- Investors may need to weigh the companies’ AI power opportunity against continued cyclicality in their core oilfield services businesses.
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The physical constraints of artificial intelligence (AI) are no longer limited by silicon or compute capacity. Today, the singular bottleneck slowing global technology expansion is electricity. Hyperscale data centers require staggering amounts of continuous power, and national utility grids lack the infrastructure to deliver gigawatt-scale loads on the timelines technology developers demand. Grid interconnection queues often stretch for years, forcing tech giants to seek immediate alternatives outside the traditional utility framework.
This structural crisis has opened the door for an entirely unexpected sector. Legacy oilfield service providers are aggressively stepping in to fill the capacity gap, repurposing existing fossil fuel hardware to deliver modular natural gas power directly to data center sites. Investors observing this shift are witnessing a rare moment in which heavy industrial assets are becoming the primary enablers of next-generation technology.
Drilling for Data Center Solutions
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Click here to get Jason Bodner's top pick for freeThe July 2026 strategic alliance between SLB (NYSE: SLB) and Liberty Energy (NYSE: LBRT) illustrates this fundamental market shift. By combining modular infrastructure with integrated natural gas power generation, SLB and Liberty Energy are positioning themselves as critical capacity providers for the technology sector. The partnership bridges the gap between compute infrastructure and immediate power generation, creating a potentially durable revenue stream that equity markets have yet to fully digest.
Rather than viewing SLB and Liberty Energy strictly as traditional upstream oilfield operators, market participants should begin evaluating them as essential infrastructure providers for the artificial intelligence ecosystem. This pivot offers a compelling blueprint for how legacy energy expertise can help solve immediate macroeconomic bottlenecks.
Behind-the-Meter Economics Take Charge
To understand the economic gravity of this partnership, investors should examine the mechanics of behind-the-meter power.
Generating electricity behind the meter means producing power on-site, completely independent of the traditional utility transmission grid. For a data center developer, this eliminates multi-year delays waiting for utility lines to be built and approved by local regulators.
SLB brings deep project execution capabilities and prefabricated modular infrastructure to the table. The company has already shipped more than 1.3 gigawatts of infrastructure for data center projects since April 2024. Management expects cumulative global deliveries to exceed two gigawatts by the end of 2026. This is not speculative research and development; it is an active and monetized pipeline.
Liberty Energy steps in to provide the actual power generation systems and intelligent power controls through its Liberty Power Innovations arm. Liberty Energy targets deploying roughly three gigawatts of power projects by 2029.
The underlying margin tailwind for this venture rests on feedstock economics. North America possesses an abundance of structurally cheap natural gas.
Tapping into this localized and inexpensive fuel source to run modular turbines makes the solution offered by SLB and Liberty Energy economically superior to grid-tied utility power while completely bypassing bureaucratic utility timelines.
Mispriced Multiples and Cash Flow Visibility
Despite this strategic pivot toward secular growth, the market continues to misprice energy service companies. Institutional capital largely treats them as cyclical fossil-fuel operators rather than emerging technology infrastructure plays. SLB currently trades near $47, with a market capitalization of roughly $70.13 billion.
SLB operates with a trailing price-to-earnings ratio of 20.49 and a forward price-to-earnings ratio of 18.13. Backed by solid operating cash flow of $4.65 per share, SLB supports a reliable 2.52% dividend yield. While SLB trades at a premium valuation relative to legacy peers like Baker Hughes (NASDAQ: BKR) and Halliburton (NYSE: HAL), the stock remains heavily tied to international rig counts and Middle East capital expenditures rather than its digital and new energy initiatives.
Liberty Energy presents a more complex valuation puzzle for fundamental investors. Priced near $24.50 with a $4 billion market capitalization, Liberty Energy trades at a trailing price-to-earnings ratio of 27.14. Its forward price-to-earnings ratio is heavily distorted at 102.68. This multiple expansion reflects analysts modeling a sharp contraction in forward earnings per share, driven by immediate pricing headwinds in the core North American hydraulic fracturing market.
This valuation distortion creates an asymmetric opportunity. The market is pricing Liberty Energy strictly on the cyclical weakness of its legacy completion services, while largely discounting the high-margin cash flows emerging from its natural gas power generation pipeline. While awaiting broader market recognition, investors are supported by a newly authorized quarterly cash dividend of 9 cents per share, yielding 1.47%.
Seeing Past the Fracking Short Squeeze
Institutional sentiment across both equities reflects this foundational misunderstanding of the evolving business models. SEC filings show a recent pattern of measured insider selling across both boards, including by Liberty Energy's Chief Financial Officer, who divested shares in early July 2026.
Short sellers are heavily targeting Liberty Energy, pushing the short interest ratio to bearish levels. Wall Street analysts remain focused on a 25% year-over-year decline in adjusted earnings before interest, taxes, depreciation, and amortization from Q1 2026. That decline was a direct result of the cooling domestic frac spread market, but it ignores the forward-looking growth engine. SLB faces a healthier short interest profile but continues to weather analyst price target reductions tied to global drilling fluctuations rather than its emerging capacity to power data centers.
When institutional capital remains anchored to legacy metrics, observant investors gain a distinct advantage. The broader oilfield services sector is actively rerouting hardware to address technology infrastructure bottlenecks. Once revenue from behind-the-meter data center power eclipses traditional upstream operations, SLB and Liberty Energy will likely experience aggressive multiple expansion as the market correctly categorizes them.
What to Watch as the Grid Transition Scales
The immediate proving ground for this fundamental thesis arrives with the upcoming Q2 2026 earnings reports. Liberty Energy takes the stage on July 22, 2026, followed closely by SLB on July 24, 2026.
Analysts will undoubtedly press management on core legacy operations, but the real value for forward-looking investors lies in the commentary surrounding the new joint venture. Initial contract bookings, projected margins on power generation units, and the speed at which Liberty Energy can scale its three-gigawatt pipeline will determine how quickly institutional investors begin re-rating the stocks.
Investors monitoring the artificial intelligence infrastructure boom might consider adding SLB and Liberty Energy to their watchlists as earnings season approaches. Those comfortable absorbing near-term commodity cyclicality could view the current valuation distortion as an attractive entry point before Wall Street fully prices in the shift from fossil fuel service providers to gigawatt-scale technology vendors.
Broadcom's $30 Billion Apple Deal: This Chip Giant Is About More than Just AI
Authored by Leo Miller. Originally Published: 7/10/2026.
Key Points
- Broadcom extended its chip supply agreement with Apple through 2031, a deal Apple expects to exceed $30 billion in value.
- Non-AI semiconductors and infrastructure software together made up just over half of Broadcom's revenue last quarter, showing diversification beyond AI chips.
- Broadcom forecasts accelerating growth across AI semiconductors, non-AI semiconductors, and infrastructure software next quarter, even as its shares trade about 20% below their highs.
- Special Report: SpaceX is offering you shares. Don't take them.
Semiconductor giant Broadcom (NASDAQ: AVGO) has established itself as one of the leading players in AI chips. The industry behemoth, NVIDIA (NASDAQ: NVDA), remains by far the world’s largest AI chip company. Even so, Broadcom’s AI sales tower over those of other major names like Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC).
Broadcom is far more than just an AI chip company. Its latest deal with tech giant Apple (NASDAQ: AAPL), which is expected to be worth more than $30 billion, clearly demonstrates that point.
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Jensen Huang says AI can't scale without it. Google Ventures calls it the future of AI compute. Sequoia Capital - the firm behind Anthropic and OpenAI - calls it a 'holy grail.' It's smaller than a fingertip and made of glass.
Wall Street insider Jason Bodner - who called Nvidia at $4.50 - believes this 'light-speed' device could be bigger for AI than GPUs and is about to launch a new wave of winners. He's sharing his number one stock pick tied to it at no cost.
Click here to get Jason Bodner's top pick for freeWith this long-term agreement, Broadcom is locking in sales from one of its most important non-AI chip customers for years to come. Apple is also the world’s leading consumer device company, once again highlighting Broadcom's ability to win business from the technology leaders.
The deal serves as a reminder that investors should not view Broadcom solely through the AI lens. Although the company is heavily tied to the AI trade, investors would be remiss not to recognize its strength outside of AI when evaluating the stock.
Apple: Broadcom’s Non-AI Chip Engine
To understand the significance of this deal, it helps to look at the breakdown of Broadcom’s revenue streams. Broadcom reports three key revenue lines: AI semiconductors, Infrastructure Software, and Non-AI Semiconductors. Its relationship with Apple falls squarely within the non-AI semiconductor segment, where Apple serves as an anchor customer. Apple has been a long-standing Broadcom customer, first using Broadcom chips back in 2009 for the iPhone 3GS.
Although Non-AI Semiconductors is Broadcom’s smallest segment, it remains an important revenue stream for the company. At $4.2 billion last quarter, it accounted for approximately 19% of total sales of $22.19 billion.
Past statements from Broadcom suggest the company’s Q4 2024 revenue from Apple was near $2.2 billion. Based on that figure, Apple could now represent roughly half of Broadcom’s non-AI chip revenue and about 10% of total revenue.
In that context, the new agreement is meaningful. By extending the agreement through 2031, Broadcom secures a critical non-AI customer and a sizable, long-term revenue stream.
Notably, this marks the second time in recent years that the companies have extended their partnership, underscoring Broadcom’s ability to retain key customers. In 2023, the companies announced a deal under which Broadcom would produce 5G radio-frequency components for Apple.
Now, Broadcom and Apple are renewing their radio-frequency chip partnership. Apple notes that “Broadcom will produce advanced radio-frequency components—including FBAR filters—and advanced wireless connectivity technologies at the Fort Collins facility.”
Apple expects the agreement to exceed $30 billion, with Broadcom producing more than 15 billion U.S.-made chips. To support the partnership, Broadcom will invest $1.5 billion to expand and upgrade its Fort Collins facility. While that is a cost for Broadcom, the payoff is far larger.
Beyond AI Chips: Non-AI Semiconductors and Software Are Huge Revenue Drivers
While Broadcom’s relationship with Apple is noteworthy, it is also worth highlighting the importance of its other major segment outside AI chips: Infrastructure Software. The company’s infrastructure software business is primarily driven by VMware. VMware provides hypervisor software, which allows companies to use computing resources more efficiently.
In its latest quarter, Broadcom’s Infrastructure Software business generated $7.2 billion in revenue, or 32% of total sales. This reinforces the point that investors should not view Broadcom only as an AI chip company. Together, Non-AI Semiconductor sales and Infrastructure Software sales totaled $11.4 billion. In other words, just over half of Broadcom’s total sales came from sources other than AI chips, offering meaningful diversification away from AI revenue.
Additionally, Broadcom expects both non-AI chip revenue and infrastructure software growth to accelerate significantly next quarter. It forecasts non-AI chip growth of 12% year over year (YOY), up from 6% YOY last quarter. Non-AI chip bookings also reached $6 billion last quarter. Broadcom says that figure, which is significantly higher than sales, is a “clear indication we're on a path towards a full cyclical recovery." Meanwhile, it sees infrastructure software sales rising 31% YOY, compared to 9% YOY last quarter.
Still, with AI semiconductor growth expected to rise by more than 200% YOY, up from 143% YOY last quarter, the AI semiconductor segment is clearly Broadcom's main growth driver.
Because AI contributes the vast majority of growth, it will continue to have an outsized impact on Broadcom’s share price.
Broadcom Keeps Chugging Away Amid Share Weakness
Overall, Broadcom’s Apple deal solidifies one of its largest single-customer relationships. Meanwhile, the company expects all three parts of its business to experience accelerating growth next quarter.
With that, the world’s second-largest semiconductor company continues to fire on all cylinders, despite shares being down about 20% from their highs.
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