The Surprising Sector Matching Nvidia's Returns, Unrelated to AI

The oil services sector, particularly offshore drilling, is experiencing significant returns as demand increases and supply is limited due to the ESG movement. Companies like Weatherford International, Transocean, and Tidewater have seen their stock prices surge over the past year. Rupert Mitchell, author of the Blind Squirrel Macro blog, highlights the high utilization rates and climbing day rates in the offshore drilling industry. Additionally, these companies are trading at a significant discount to their replacement cost, preventing new equipment from being built. As a result, oilfield equipment and services players with low average age fleets are becoming price-makers in the market.