Caterpillar Powers Ahead as AI Demand Surges

Caterpillar has emerged as an important AI stock despite not being directly involved in AI innovation. The company supplies power generators to data centers, which are a crucial part of AI infrastructure.

The power and energy segment of Caterpillar's business grew by 22% year-over-year in the first quarter, contributing significantly to the company's overall revenue growth of 22%. This growth is attributed to the increasing demand for data centers, which require backup energy sources like Caterpillar's generators.

The International Energy Agency projects a 15% annual increase in data center electricity consumption through 2030, while Deloitte forecasts that power demand from AI data centers in the U.S. will grow more than 30-fold by 2035. These projections indicate sustained growth in the demand for Caterpillar's products.

Caterpillar anticipates continued growth, with executives stating that they expect 'higher sales and revenue growth in 2026 compared to a quarter ago.' The company has a record order backlog of $62.7 billion, providing clear revenue visibility and enabling it to achieve double-digit revenue growth rates.