Caterpillar Surges as Data Centre Demand Fuels Strong Earnings
Caterpillar Inc., an old-economy giant, has seen its shares surge 12% after posting its strongest single-day performance in 17 years. The company's second-quarter results exceeded analyst expectations across most metrics, with revenue reaching $20.54 billion, a 24% increase year on year.
Adjusted earnings reached $8.17 per share against consensus estimates of $6.20, while operating profit climbed to $4.3 billion. The company's order backlog has also grown significantly, reaching a record $72.1 billion at the end of the quarter, a 92% increase compared to the same period in 2022.
The backlog shows sustained demand for construction and power equipment tied to data centre infrastructure. Caterpillar's construction division reported a 35% increase in sales during the quarter, while its power and energy division grew 17%. The company plans to expand capacity at engine manufacturing plants to accommodate the order pipeline, with more than 80% of revenue now coming from construction and power equipment.
Chairman and CEO Joe Creed has raised the company's long-term annual growth target to between 6% and 9% through 2030. The company faces regulatory headwinds, including moratoriums on new data centre projects in Seattle and parts of New York state, which could slow investment in data centre infrastructure.