Caterpillar hits record high on AI data center power boom
Strategic alliance for 2 GW of power generation creates $2B opportunity as hyperscale infrastructure build-out accelerates
Caterpillar shares surged to a record high on Thursday as the heavy equipment manufacturer capitalizes on an accelerating artificial intelligence infrastructure boom, reporting quarterly growth driven by surging demand for data center power systems.
The stock jumped 3.7% to $667.37, surpassing its previous 52-week high of $655.78, as investors responded to a strategic partnership that positions Caterpillar at the forefront of the AI energy build-out. The rally added roughly $11 billion to the company's market capitalization, which now stands at approximately $299 billion.
The company reported fourth-quarter revenue of $19.13 billion, an 18% increase from the prior year, according to Caterpillar Investor Relations. The standout performance came from the Energy & Power segment, which grew 23% year-over-year to reach $9.4 billion.
The primary driver behind this growth is unprecedented demand for backup and primary power generation systems at hyperscale data centers supporting AI workloads. These facilities require massive, reliable electrical infrastructure to support energy-intensive computing clusters used for training and running large language models.
Caterpillar announced a strategic alliance with American Intelligence & Power and dealer Boyd CAT to deploy 2 gigawatts of dedicated power generation capacity for hyperscale AI infrastructure. The partnership represents a near-term revenue opportunity of approximately $2 billion, highlighting the scale of capital flowing into data center construction.
"Data-center demand helps Caterpillar to best quarter ever," MarketWatch reported, though the publication noted potential headwinds from trade policy. The article highlighted how traditional construction equipment demand remains robust, but the explosive growth in data center power systems has become a critical new growth vector.
The Wall Street Journal detailed how Caterpillar's diverse industrial portfolio is benefiting from multiple tailwinds, with AI infrastructure demand complementing strength in traditional construction and mining markets. The Energy & Power segment's performance is particularly noteworthy given its higher-margin profile compared to construction equipment.
Analysts have been increasing their growth projections for Caterpillar's data center-related business. While the company faces tariff risks on imported components, the sheer scale of AI infrastructure spending appears to be offsetting broader macroeconomic concerns. The AI data-center boom continues to drive growth across multiple Caterpillar business lines.
The strategic alliance structure is notable for its scale and focus. By partnering with specialized power providers and leveraging its dealer network, Caterpillar is positioning itself as a comprehensive solutions provider rather than just an equipment vendor. The 2 GW deployment target represents significant capacity—roughly equivalent to two nuclear reactors—underscoring the enormous power requirements of modern AI infrastructure.
From a valuation perspective, Caterpillar now trades at 32.8 times trailing earnings, above its five-year average, reflecting investor enthusiasm for the AI data center growth story. However, with 14 analysts rating the stock a buy or strong buy versus 12 holds and 2 sells, sentiment remains broadly positive despite the premium valuation. The consensus analyst target price of $625.99 suggests some caution about the recent rally's sustainability.
Looking ahead, investors will be watching for updates on the timing of the 2 GW deployment and potential additional partnerships in the AI infrastructure space. As major technology companies continue accelerating their data center capital expenditures, Caterpillar's established position in industrial power generation provides a competitive advantage that competitors may find difficult to replicate quickly.
The company's next dividend payment of $1.47 per share is scheduled for February 19th, providing additional income for shareholders during what has become a transformative period for the industrial conglomerate.