Caterpillar's stock climbed more than 9% in premarket trading Tuesday after the construction and mining equipment maker delivered a second-quarter earnings beat and lifted its full-year revenue outlook, with its power segment riding a wave of data center spending tied to artificial intelligence.
The company now expects full-year revenue to grow in the mid-to-high teens percentage range, an upgrade from its previous forecast of low-double-digit growth. It also trimmed its projected tariff-related costs for the year to about $2.2 billion, down from an earlier range of $2.2 billion to $2.6 billion.
Adjusted earnings came in at $8.17 per share for the quarter, comfortably above the $6.20 analysts had expected, according to LSEG. That compares with $4.72 per share in the same period a year earlier. Revenue for the April-June quarter rose 24% year over year to a record $20.5 billion, marking the first time in Caterpillar's history that quarterly sales surpassed the $20 billion threshold.
“This is the first time in company history that we have generated over $20 billion in sales and revenues in a single quarter,” said Chairman and CEO Joe Creed.
AI infrastructure fuels equipment demand
The results underscore how the global AI boom is reshaping demand across industrial sectors beyond semiconductor makers. Power & Energy sales increased 17% year over year to $8.238 billion from $7.037 billion, driven by higher sales of large reciprocating engines, turbines, and related services, primarily for data center applications.
Over recent quarters, Caterpillar has benefited from surging demand for both construction machinery used to build data centers and power-generation equipment needed to support those facilities. The company's core construction industries segment posted a 35% increase in revenue during the quarter, led by a 50% jump in North American sales.
Infrastructure spending boosts construction business
Beyond AI infrastructure, Caterpillar continued to benefit from increased infrastructure and energy spending in the United States. Strong commercial construction activity, including projects linked to data centers, combined with infrastructure investments under the current administration, helped drive order growth.
During the quarter, Caterpillar booked $9.4 billion in new orders, lifting its order backlog to a record $72.1 billion. “Strong order rates and a growing backlog reflect broadening momentum across all three of our primary segments,” Creed said.
Analysts see AI opportunity expanding
The latest results come despite recent volatility across AI-linked stocks as investors questioned whether the pace of AI spending could be sustained. Caterpillar and other power equipment suppliers for data centers, including Vertiv Holdings and GE Vernova, have experienced share price weakness in recent weeks amid broader concerns over AI capital expenditure.
However, analysts continue to view Caterpillar as a long-term beneficiary of the AI infrastructure buildout. Gimme Credit analyst Carol Levenson noted that Caterpillar's Power & Energy division “is becoming increasingly dominant as demand for its large reciprocating engines and turbines swells with data-center/AI capital spending.” Another analyst, Semenuk, argued that the growth opportunity remains in its early stages and believes Caterpillar could generate at least $10 in quarterly earnings per share by 2029.
Caterpillar shares crossed the $1,000 mark in June and remain up about 40% so far this year. JPMorgan sees the stock as a premier cyclical and industrial play, citing its exceptionally solid balance sheet and pricing power that allow the manufacturer to preserve operating margins even during broader macroeconomic uncertainty.
For investors tracking the broader AI trade, the strength in Caterpillar's power business echoes the momentum seen in other AI beneficiaries, such as Palantir's recent earnings-driven rally. Meanwhile, the company's record backlog suggests sustained demand, a theme also visible in SpaceX's upcoming earnings and the broader industrial outlook.
This article is for informational purposes only and does not constitute financial advice.
