Caterpillar Raises Outlook as Data Center Demand Accelerates Growth

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•  04 Aug 2026
 

$CAT Caterpillar shares climbed after the heavy equipment manufacturer reported 24% second quarter revenue growth and raised its annual outlook. The stock gained as much as 10% early in the session before giving back part of the advance. The earnings catalyst reflected strong new orders and expansion across all three major business segments.

Revenue reached $20.54 billion, marking the first time Caterpillar quarterly revenue exceeded $20 billion. Net income rose to $3.59 billion, or $7.77 per share, from $2.18 billion, or $4.62 per share, in the same quarter last year. Adjusted earnings reached $8.17 per share, above the analyst forecast of $6.22. The results strengthened earnings momentum.

Data centers are becoming a central growth engine for Caterpillar even though the company does not manufacture chips or software. Caterpillar supplies engines, generators, and turbines designed to provide continuous electricity to data centers, which require expanding energy capacity. Energy and Transportation revenue increased 17% to $8.24 billion. Management expects demand to remain elevated through the rest of the year as cloud and generative artificial intelligence data centers are built.

Caterpillar plans to increase production capacity to meet demand. The company has announced a $725 million investment in an Indiana plant that manufactures reciprocating engines for generators. It also plans to more than double turbine engine production capacity by 2030. The investment supports continued delivery growth as infrastructure demand expands.

The order backlog reached $72.1 billion, up 92% from the same period last year. Caterpillar expects to increase production and delivery rates during the second half of the year. The backlog provides visibility into continued activity and supports institutional flows tied to infrastructure and artificial intelligence investment.

Construction Industries sales increased 35% to $8.35 billion. Demand for haul trucks, bulldozers, and excavators was supported by investment in data centers, critical infrastructure, and large projects. Resource Industries revenue rose 20% to $4.65 billion. Growth across all three divisions allowed Caterpillar to raise its full year revenue outlook.

Caterpillar now expects annual growth in the mid to high teens, compared with its previous forecast for high single digit to low double digit growth. The revised outlook reflects the pace of orders, the backlog, and demand for power systems and construction equipment. The stronger forecast supports the case for multiple expansion as the revenue base broadens.

Profitability also benefited from lower than expected tariff costs and a $392 million tariff refund. The operating margin increased to 20.9% from 17.3% in the same quarter last year. Tariff costs totaled approximately $400 million, below the company forecast of $700 million. The lower cost burden contributed to the earnings improvement.

Caterpillar expects third quarter tariff costs of approximately $600 million. The company said geopolitical conditions remain complex and noted some weakness in the Middle East. It expects continued demand, higher sales volumes, and price increases to offset regional pressures.

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