Caterpillar's Secret Order Book Story: How AI Fueled the Stock Surge

Caterpillar's stock surge in 2025-2026 may have come as a surprise to many, but beneath the surface, a different story was unfolding. The company's revenue print for fiscal Q2 2025 showed a decline of 4.9%, and traditional indicators like implied volatility were subdued.

However, a closer look at Caterpillar's order book revealed a substantial increase in order volume, which had expanded to record levels. In its fiscal first quarter of 2025, management reported an 'all-time record for organic backlog growth in a quarter,' with a $5 billion jump that pushed the total to $35 billion.

The orders were driven by growing energy needs, particularly from data centers and cloud computing, which was being fueled by generative AI. Caterpillar's executives pointed directly to this trend as the source of the uptick, and the company had already announced a multiyear investment to expand its large engine output capability.