Caterpillar Poised to Benefit from Growing Demand for AI-Driven Data Centers

Caterpillar (CAT) has emerged as an AI stock, and its position is likely to remain important for years to come. The company doesn't produce chips or innovative technologies but supplies essential energy components, including power generators that provide backup energy sources for data centers.

This role helped Caterpillar outperform the S&P 500 in recent times, and experts suggest that these gains are just the beginning. The company's power and energy segment grew by 22% year-over-year in the first quarter, accounting for more than one-third of total sales.

The construction segment also performed well as more companies build data centers, further increasing Caterpillar's exposure to the AI boom. According to the International Energy Agency, data center electricity consumption is expected to increase by 15% per year through 2030, more than four times the growth rate of total electricity consumption from all other sectors.

Caterpillar anticipates even higher sales and revenue growth in 2026 compared to a quarter ago, with power generators and North American customers driving most of this growth. The company has a $62.7 billion order backlog, representing an $11.5 billion sequential increase, which offers clear revenue visibility for the company.