The rapid expansion of artificial intelligence (AI) infrastructure and data centers is creating new opportunities for companies specializing in power generation equipment. Generac Holdings Inc. (GNRC) and Caterpillar Inc. (CAT) are both positioning themselves to benefit from this trend, though their approaches and risks differ significantly.
Generac is focusing heavily on the data center backup power market, securing large-megawatt generator contracts and long-term agreements with hyperscale customers. The company reported over $100 million in data center revenues in the second quarter of 2026 and raised its annual revenue expectation to roughly $450 million. A recent long-term supply agreement with Amazon, worth $2.4 billion across 2027 and 2028, further solidifies Generac’s role in this growing sector. However, the company faces risks related to cyclical capital spending cycles and competition in the data center space.
Caterpillar, a leader in construction and mining equipment, also offers a broad range of power generation solutions. The company’s Power & Energy segment saw a 17% year-over-year sales increase in the second quarter of 2026, driven by strong demand for large gensets and turbines used in data centers. Caterpillar’s diversified business model provides stability, but it remains exposed to geopolitical risks and tariffs, which could impact its financial performance.
While both companies are well-positioned to capitalize on the data center boom, investors must weigh the growth potential against the unique risks each company faces. Generac’s aggressive expansion in the data center market offers high rewards but comes with operational and competitive challenges. Caterpillar’s diversified portfolio provides a buffer against market fluctuations but may not offer the same growth trajectory as Generac.