Caterpillar Has Raised Its Revenue Growth Forecast Thanks to the AI Boom. Should You Buy the Stock?

Industrial equipment manufacturer Caterpillar reported sales growth across all business segments and a record order backlog. The company also raised its revenue growth forecast for 2026. Analysts note that Caterpillar has become an unexpected beneficiary of the AI boom thanks to the launch of industrial power generators for data centers. The company’s stock fell 16% in July, and short seller Michael Burry wrote about opening a short position in the stock. During trading on Tuesday, August 4, the stock rose by more than 6%.

Caterpillar raised its revenue growth forecast for 2026 to approximately 14–19% (mid- to high-teens), Bloomberg reported. In April, Caterpillar had expected growth “in the low to mid-range” within that same range.

Caterpillar’s Power & Energy business segment, which manufactures generators, reciprocating engines, gas turbines, and related equipment, has become one of Caterpillar’s largest business segments in terms of revenue. In the second quarter, sales for this segment rose 17% year-over-year to $8.24 billion, accounting for about 40% of total quarterly revenue. The division has attracted the attention of investors, who have begun to view Caterpillar as a key player in the artificial intelligence revolution, Bloomberg explains. The construction equipment segment, which was previously Caterpillar’s core business, generated $8.35 billion for the company.

Caterpillar's total revenue for the second quarter rose 24% year-over-year to $20.5 billion. Analysts surveyed by Bloomberg had expected $19 billion. Adjusted earnings nearly doubled to $8.17 per share. The average estimate from analysts surveyed by Bloomberg was $6.17 per share.

The company also reported a record order backlog of $72 billion—up 92% from a year ago. During a conference call with investors, Caterpillar CEO Joe Creed noted that some orders are scheduled for fulfillment as late as 2030.

“This order book points to all the same drivers as before—data center construction. First chips, then servers, and now industrial equipment,” Bloomberg quotes Mark Malek, investment director at Siebert Financial, as saying.

Caterpillar shares rose by nearly 13% at their peak during Tuesday's trading session, but then slowed to a gain of about 6.6%.

Shares of Caterpillar and other manufacturers of data center power equipment, including Vertiv Holdings and GE Vernova, have fallen in recent weeks amid investor concerns about the sustainability of tech giants’ capital expenditures on AI.

Last week, Baird downgraded its rating on Caterpillar shares to the equivalent of a “hold,” citing efforts by state and local authorities to restrict data center construction, according to Bloomberg. Investor Michael Burry, known for betting against the U.S. housing market before the 2008 crisis, also announced in late June that he had opened a short position in Caterpillar shares.

The sell-off in AI-related stocks was triggered by “a superficial narrative that the AI investment theme has run its course,” David Wagner, a portfolio manager at Aptus Capital Advisors, told Bloomberg. “Caterpillar’s record order intake underscores that the physical infrastructure needed to support digital infrastructure continues to expand regardless of seasonal market noise,” he said.

Caterpillar shares have fallen 6% over the past month (taking into account the surge on August 4), but are still up 54% since the start of 2026 and 104% over the past 12 months. Analysts’ opinions on the stock are mixed: there are 15 buy recommendations (Buy and Overweight ratings) versus 13 Hold recommendations and two Underweight recommendations, according to MarketWatch. The average price target of $987.99 is 19% above the latest closing price.

This article was AI-translated and verified by a human editor