Baker Hughes Lands Multi-Year Gas Turbine Deal with Kodiak for Data Center Power

What happened

Baker Hughes announced a multi-year strategic agreement with Kodiak Gas Services to provide gas turbine power generation solutions, anchored by an initial 1 GW award with potential to reach 1.8 GW, supporting U.S. data center growth. The deal validates the company's data center power thesis, adding to the ~$1 billion in data center-related power systems orders already booked in 2025. However, the agreement is a framework that may convert over several years, and the initial award builds on existing backlog rather than immediately accelerating revenue. The master report rates the stock a Potential Sell at $56.88, citing premium valuation (21x P/E, 17.5x EV/EBITDA) and execution risk from the pending Chart Industries acquisition, with limited upside in the base case. While this deal supports the bull scenario, it does not alter the asymmetric risk/reward that favors trimming positions, as the stock already prices in sustained strong order flow.

Implication

The Kodiak agreement provides tangible evidence of IET order strength in the data center vertical, which supports the bull case, but the stock's premium valuation (21x P/E, 17.5x EV/EBITDA) already prices in such wins. The core risks—OFSE softness, Chart integration, and elevated leverage—remain, limiting upside to ~$70 in the best case while downside to $40 is plausible if LNG or synergies falter. Investors should wait for a better entry point or evidence of synergy delivery before adding.

Thesis delta

The Kodiak agreement incrementally reduces uncertainty around the data center power pipeline, making the bull case slightly more tangible. However, the core thesis remains unchanged: Baker Hughes trades at a premium multiple that requires flawless execution on LNG orders, Chart integration, and de-leveraging. The shift is that one of the bullish catalysts now has a concrete order, but it does not overcome the valuation and integration risks that underpin the Potential Sell rating.