Caterpillar lifts revenue forecast as AI data center power demand surges

Caterpillar is emerging as an unlikely winner from the AI buildout, as surging demand for data-center power pushed the industrial giant to raise its annual revenue forecast after first-quarter profit topped Wall Street estimates.

The company said first-quarter 2026 sales and revenues rose 22 percent to $17.4 billion from $14.2 billion a year earlier. Adjusted profit per share came in at $5.54, above the consensus estimate of $4.62, while reported profit per share was $5.47. Shares rose 5.3 percent in premarket trading as investors focused on a business that is increasingly tied to the electricity needs of AI infrastructure, not just earthmovers and mines.

The strength was broad, but the clearest signal came from Caterpillar’s power and energy business, which advanced 22 percent as the company sold more turbines, generators and backup systems for data centers that need reliable, round-the-clock power. Construction revenue jumped 38 percent, helping offset weakness elsewhere. North America, Caterpillar’s largest market, remained a major source of demand.

Chief executive Joe Creed said Caterpillar had a “strong start to the year,” pointing to “resilient end markets,” “robust order activity,” and a “record backlog” as support for continued momentum. The company said the revenue increase was driven primarily by $2.3 billion of higher sales volume and $426 million of favorable price realization.

Caterpillar also showed strong cash generation. It produced $1.9 billion of enterprise operating cash flow in the quarter, ended with $4.1 billion of enterprise cash, and returned $5.7 billion to shareholders, including $5.0 billion in share repurchases and $0.7 billion in dividends. Operating profit margin was 17.7 percent, down from 18.1 percent a year earlier, while adjusted operating profit margin slipped to 18.0 percent from 18.3 percent.

Even with the stronger outlook, tariff pressure remained a drag. Caterpillar cut its expected tariff hit for 2026 to $2.2 billion to $2.4 billion, from a prior estimate of $2.6 billion. Still, the company’s updated forecast implies low-double-digit revenue growth for 2026, an upgrade from the roughly 7 percent compounded annual growth it had previously projected.

The shift matters because it shows how AI is spilling into the physical economy. The story is no longer just chips and software. It also includes generators, turbines, construction equipment and the heavy industrial systems needed to keep data centers running. Caterpillar’s move to support the Monarch Compute Campus with American Intelligence & Power Corporation and Boyd CAT underscores that shift, as does the company’s plan to expand large reciprocating engine capacity to nearly three times 2024 levels.

Caterpillar said 2025, its centennial year, produced the highest full-year sales and revenues in company history, including a single-quarter record of $19.1 billion. Power generation sales surpassed $10 billion last year, a sign that the AI-driven surge in electricity demand is becoming a durable part of the company’s growth story.