Caterpillar Shifts Focus from Merchandising to Data Centers

Caterpillar's management has undergone a significant shift in their narrative over the past year. In the fiscal Q2 2026 call, they pivoted from emphasizing merchandising programs for construction machines to highlighting data centers as a key driver of power demand.

The company's Power & Energy segment saw a 17% increase in sales, driven by strong demand for large generator sets and turbines used in data centers. Construction Industries also experienced growth, with sales rising 35% due to higher volume and better prices.

While the shift in management's focus may raise concerns about Caterpillar's construction business, the segment still accounts for a significant portion of revenue. However, dealer inventory has increased by $400 million, indicating that some construction sales may be going into stock rather than being sold to end customers.