Caterpillar positioned to capitalize on surging AI-driven power demand

Caterpillar Inc. (NYSE: CAT) is increasingly emerging as an indirect beneficiary of the global AI infrastructure boom, with its Power Generation business becoming a key engine of growth as hyperscale data center operators race to secure electricity supply.

Revenue from Caterpillar’s Power & Energy segment is expected to rise 17% year-on-year to $33.4 billion in 2026, driven by strong demand for backup power systems, generators and energy infrastructure supporting large-scale AI computing facilities. The division is projected to account for 44% of group revenue this year.

To meet rising demand, Caterpillar is undertaking a substantial expansion of its power-generation capabilities. The company plans to triple engine and turbine production capacity and increase gas turbine capacity by 2.5 times by 2030, positioning itself to capture growing demand for both primary and standby power solutions. The company sees an opportunity to generate higher-margin recurring revenue through long-term service agreements tied to these installations.

These investments reflect analyst expectations that data-center construction and power requirements will remain a powerful tailwind for years. By 2030, Power & Energy revenue is forecast to reach $54.8 billion, representing nearly 52% of total company sales.

The AI buildout is also expected to support a recovery in Caterpillar's core construction business. The company has pointed to accelerating investment in data centers as a source of construction demand and has raised its long-term outlook on the back of AI-related infrastructure spending. Revenue from the Construction segment is expected to increase 15% to $28.8 billion in 2026, reversing a 2% decline last year.

 This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.