Caterpillar Inc. (NYSE: CAT) is emerging as an unexpected winner of the artificial intelligence revolution, as soaring demand for data center infrastructure drives record growth in its power generation business. Once best known for bulldozers and heavy mining trucks, Caterpillar is now seeing a significant share of its profits come from backup generators, turbines, and related machinery powering the AI data centers built by major technology companies across the United States.

The company’s Energy & Transportation segment, which manufactures diesel and gas generators, engines, and turbines, has become the firm’s largest business unit… accounting for nearly 40% of total revenue in 2024. In its latest quarterly report, Caterpillar said sales from that segment rose 31% year-over-year, far outpacing the growth of its traditional construction equipment line.

Analysts expect the shift to continue. According to a research note from UBS analyst Steven Fisher, both Caterpillar and Cummins Inc. (NYSE: CMI) are set to see a “meaningful” boost to earnings over the next three years as generator sales surge alongside the buildout of AI data centers. Fisher estimated that revenue from data center power generation could grow by roughly $1.5 billion for each company, nearly doubling from current levels.

“Our base case suggests revenues from generator sales for U.S. data centers could come close to doubling,” Fisher wrote. “However, it is off of a relatively small base for each.” He added that the companies’ primary earnings drivers… construction equipment for Caterpillar and trucking engines for Cummins… remain intact, with the AI-linked business acting as a high-margin supplement.

A separate report by Barclays analyst Adam Seiden estimated that Caterpillar could triple its annual data center power revenue by 2030, as hyperscale operators seek both backup and primary generation capacity. “The majority of future growth will come from demand for primary electricity generation,” Seiden said.

Caterpillar’s performance underscores how the artificial intelligence boom is rippling far beyond Silicon Valley, driving investment in physical infrastructure… from semiconductors and cooling systems to turbines and backup power. The company’s Texas-based Energy & Transportation division has secured large-scale contracts with several technology firms, helping offset slower growth in traditional end markets such as construction and mining.

“It’s a great illustration of the macroeconomic trends manifesting at the microeconomic level,” said Michael O’Rourke, Chief Market Strategist at JonesTrading. “AI data center buildouts have been key drivers of U.S. GDP growth this year, and that’s showing up directly in Caterpillar’s Power Generation earnings.”

Caterpillar shares have climbed 63% year-to-date, while Cummins has gained about 26%, as investors seek industrial exposure to the AI infrastructure cycle. The company continues to forecast steady long-term growth, driven by infrastructure spending, energy diversification, and the rising global demand for resilient power systems. Still, analysts caution that market expectations for AI-linked industrials may be running ahead of fundamentals. Stocks tied to data center demand… from Caterpillar to emerging reactor developer Oklo Inc…. have shown heightened volatility amid questions about how quickly power consumption will scale relative to Wall Street’s projections.

Even so, Caterpillar’s transition from construction icon to AI infrastructure supplier marks one of the most striking industrial evolutions in decades. As the AI race accelerates, the company that once built America’s highways is now quietly helping power its digital future.

About Caterpillar Inc.

Caterpillar Inc. (NYSE: CAT) is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Founded in 1925 and headquartered in Deerfield, Illinois, Caterpillar supports infrastructure and energy development in nearly 200 countries through its global dealer network. The company’s products and services help build the essential systems that power and connect modern economies.

About Cummins Inc.

Cummins Inc. (NYSE: CMI) is a global power technology leader headquartered in Columbus, Indiana, specializing in diesel, natural gas, hybrid, and electric powertrains, as well as related components and technologies. Founded in 1919, Cummins serves customers in more than 190 countries and territories through a network of independent and company-owned distributors. Its products power transportation, industrial, and energy markets worldwide.

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.