Caterpillar Raises 2026 Outlook on AI Data Center Orders

Caterpillar reported stronger-than-expected second-quarter results and lifted its full-year sales growth target, citing robust orders tied to the rapid expansion of data centers for artificial intelligence. The company's performance underscores how the buildout of AI-related infrastructure is now driving measurable gains in traditional industrial sectors, with construction and power equipment seeing the clearest lift.

Revenue reached an all-time high of $20.54 billion in the quarter ending June 30, up 24 percent from a year earlier. Adjusted earnings per share came in at $8.17, well above the $4.72 recorded in the same period last year. Orders totaled $9.4 billion, pushing the backlog to a record $72.1 billion. The company also lowered its projected tariff costs for the year to about $2.2 billion and recorded a $392 million tariff recovery in the quarter.

Two segments accounted for the bulk of the gains. The construction industries division, which produces excavators, bulldozers and other heavy equipment, posted 35 percent revenue growth, including a 50 percent jump in North America. The power and energy segment, responsible for generators and backup power systems, grew 17 percent. Together the two units represented 81 percent of total revenue. Management attributed much of the surge to data-center projects that require both site preparation and reliable on-site electricity.

Caterpillar's results arrive as companies across technology and utilities accelerate spending on facilities that can support large-scale AI training and inference. Data centers need extensive grading, foundations and structural work, areas where Caterpillar equipment is widely used. They also require backup generation to guard against grid outages, a product line that falls under the power segment. The company has now seen multiple quarters of elevated demand in these categories, and the updated outlook suggests the trend has further room to run.

Tariff policy remains a variable in the outlook. The revised cost estimate reflects both actual collections and expectations for the remainder of the year. While tariffs add to input costs, Caterpillar has been able to pass through some of the expense and recover portions through pricing or other mechanisms. The net effect on margins has been contained so far, though sustained trade tensions could alter that balance.

Investors responded quickly. Shares rose roughly 10 percent in premarket trading, helping push Dow futures higher by about 0.6 percent. The market reaction reflects both the earnings beat and the signal that AI-related capital spending is translating into visible order flow for suppliers outside the technology sector itself.

Caterpillar has long been viewed as a bellwether for broader industrial activity. Its order book and segment results now point to a narrow but powerful source of strength: the physical requirements of AI deployment. Whether that strength spreads to other parts of the economy will depend on the pace of data-center construction, the availability of power and transmission, and the durability of current investment plans. For now, the company's raised forecast indicates that at least one major industrial supplier sees the momentum continuing into 2026.