Caterpillar Soars on AI-Driven Demand Boom for Ancillary Equipment

Caterpillar's quarterly profit surpassed estimates on Tuesday, driven by strong demand for its power-generation and construction equipment. The company raised its annual revenue growth forecast after booking orders worth $9.4 billion in the April-to-June quarter. Caterpillar's stock jumped as much as 12% in early trading, with shares last up around 7%, marking their best day in more than three months if gains hold.

The equipment giant saw a surge in orders for construction equipment amid a nationwide buildout of data centers and backup power equipment needed for such buildings. Caterpillar's core construction segment revenue grew 35% in the quarter, with a 50% jump in North America. The company builds power generators and backup power equipment under its power & energy segment.

Caterpillar CEO Joe Creed said non-residential investment in critical infrastructure programs, heavy construction, and data centers is contributing to overall construction spending levels. The company cut its full-year tariff costs forecast to around $2.2 billion from the previously expected $2.2 billion to $2.6 billion.