Oilfield Services Expand to Data Center Services As AI Booms

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Low prices for much of the last decade and increases in efficiency have caused rig counts to plummet, and have led some companies to look in new directions for revenue and profit. Companies like Schlumberger, (NYSE:SLB), and Halliburton are refocusing away from equipment rentals and manpower in their traditional core oil related services, to AI led digital subscription revenue sources. These companies are also leveraging their expertise in conducting remote field operations into Data Center power supply and construction.A report put out by Fortune Business Insights, commented on the growth prospects for this industry-“The rapid shift toward digital transformation across industries is driving the demand for data centers. Organizations are increasingly adopting cloud services for flexibility, scalability, and cost efficiency. The growth of cloud computing, including private, public, and hybrid clouds, is significantly boosting data center investments.”For example, SLB has chosen to leverage its extensive experience with hyperscalers in supporting their cloud based software into building out data centers. In their quarterly conference call with analysts, management disclosed that revenue from their Data Center Solutions segment had accelerated rapidly and totaled $331 mm for the quarter. SLB CEO, Olivier Le Peuch commented in this regard during the call-“This is clearly not driven by oil and gas customers. It's driven by our hyperscalers partners that reach out to us to help them respond to this AI boom and data center growth.”Further this represented an increase of 140% from the same period a year ago. If you are an OFS exec and you have a segment that grows at that rate, you naturally commit resources for further growth. And, placed against the backdrop of the TAM-total addressable market in this space shown in the graphic above through 2032, there is ample room for continued growth.The graphic below from SLB’s Data Center Infrastructure page shows where they see their competitive advantage in this area.Still focusing on how SLB has embraced the digital transformation, the company noted their recent reorganization had made their Digital Solutions divisions a distinct reporting entity on their balance sheet. SLB Digital Solutions is comprised of Platform & Applications, Digital Operations, Digital Exploration and Professional Services. The company noted in the call that Digital was now generating revenue at a run rate of $2.4 bn annually with a present margin of 32.7% and a line of sight to 35%. It’s SLB’s plan to integrate digital and subscription services across their entire suite of service offerings. CEO Le Peuch discussed in some detail how eventually revenue from Digital will eclipse revenue from their core oilfield services-Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,840.20 +17.86 (+0.26%)Dow 3047,562.87 +40.75 (+0.09%)Nasdaq23,724.96 +143.81 (+0.61%)Russell 20002,479.38 +13.43 (+0.54%)VIX17.44 +0.53 (+3.13%)Gold3,996.50 -19.40 (-0.48%)PortfolioSign in to access your portfolioSign inTop gainersBHF Brighthouse Financial, Inc. 57.07 +11.38 (+24.91%)ILMN Illumina, Inc. 123.54 +24.53 (+24.78%)TWLO Twilio Inc. 134.88 +22.02 (+19.51%)TVTX Travere Therapeutics, Inc. 35.16 +5.51 (+18.58%)BFAM Bright Horizons Family Solutions Inc. 109.23 +16.95 (+18.37%)Top losersATGE Adtalem Global Education Inc. 98.02 -43.75 (-30.86%)SPSC SPS Commerce, Inc. 82.24 -21.65 (-20.84%)TBBK The Bancorp, Inc. 65.37 -11.83 (-15.32%)DXCM DexCom, Inc. 58.22 -9.98 (-14.63%)ABR Arbor Realty Trust, Inc. 10.09 -1.46 (-12.64%)Most activeNVDA NVIDIA Corporation 202.49 -0.32 (-0.16%)AMZN Amazon.com, Inc. 244.22 +21.36 (+9.58%)PFE Pfizer Inc. 24.65 +0.36 (+1.48%)OPEN Opendoor Technologies Inc. 7.77 +0.43 (+5.86%)ONDS Ondas Holdings Inc. 6.44 +0.15 (+2.38%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersBTC-USD Bitcoin USD 110,056.41 +177.52 (+0.16%)ETH-USD Ethereum USD 3,853.19 +3.72 (+0.10%)QS QuantumScape Corporation 18.44 +2.65 (+16.78%)HKD AMTD Digital Inc. 2.9500 +1.2600 (+74.56%)XRP-USD XRP USD 2.51 +0.02 (+0.93%)Top economic events