Investors who bought Caterpillar shares in January 2025, today could fix about 13% of profit. The yield on securities of the company, which is known for its bulldozers, excavators and loaders, has been outpacing the S&P 500 index in terms of growth since the beginning of this year (it has added 9.7%). Judging by the latest reports, Caterpillar's business is growing not on classic construction, but on orders from the AI sphere.

Growth generators

Caterpillar's share price performance may surprise any investor looking at its traditional construction and industrial segment.

In the second quarter of 2025, the company reported revenue of $16.6 billion, down 1% from a year earlier. Net income was $2.18 billion and adjusted EPS was $4.72, compared to $5.99 in 2024. The results were impacted by tariff costs and price pressures, the combined effect of which for the year is estimated at $1.3-1.5 billion - this is how Caterpillar comments on the performance.

However, analysts and attentive investors are reading beyond the sammarie in the company's release, paying attention to where the company may have points of revenue growth. And there is good news here.

Key sources of sales showed "minus". Construction industry - quarterly revenue of $6.190 billion (-7% year-on-year), mining - $3.087 billion (-4% year-on-year). The revenue of the finance division is growing steadily - $1.042 bln (+4 %). And "new" growth is given by the Energy and Transportation segment - revenue of $7.836 billion (+7 %). This includes the production and sale of generating sets - their sales grew by 28% in the second quarter.

Generators are in demand today to equip data centers, a demand that is being pushed by the development of the artificial intelligence industry. In addition to processors for computing power, AI algorithms require a lot of electricity, which means generators are needed. They guarantee the stability of the electricity supply and make it possible to increase power capacity during peak loads.

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Jim Umpleby, who was Caterpillar's CEO in 2024, predicted at the time that data center projects were an important market for the company: "We are seeing very strong demand in the power generation segment and expect that to continue. Much of this, of course, has to do with data centers: customers use our generator sets as backup power for these centers. And thanks to the development of cloud technologies and generative AI, we believe that long-term growth is taking shape here, which will allow us to expand our sales market."

He talked not only about supplying generator sets, but also about integrating them with backup power systems and load management, which is critical for AI centers with high computing density.

In this regard, Caterpillar has more than doubled its U.S. manufacturing capacity for high-power generator engines (up 125%) from 2023. The company believes that AI and cloud computing are shaping the long-term growth in demand for power solutions.

RCR Wireless estimates that at least 100 megawatts of new data center capacity is being added in the U.S. every month since the end of 2021. In pieces, that's dozens of new centers every month, many of which are now being used as cluster simulators for high-performance computing.

According to Business Insider, by the end of 2024, the number of applications to build data centers in the U.S. has grown to 1,240 - a fourfold increase from 2010. A significant portion of these projects are being designed specifically for AI workloads. Deloitte consultants note that capital expenditures on AI-oriented data centers in North America will grow by 44% to $371 billion in 2025. And in 10 years, demand for electricity will increase 30-fold.

For hardware suppliers - from chip makers to industrial companies like Caterpillar - the AI boom offers a once-in-a-decade chance for a big payday.

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

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