Caterpillar's second-quarter revenue topped $20 billion for the first time, driven by surging data-center construction and power-generation demand. The earnings beat sent CAT stock surging in premarket trading and pushed the Dow Jones higher, while the company raised its full-year revenue outlook and disclosed a $72 billion backlog tied to AI infrastructure spending.
Caterpillar shares surged as much as 9.4% in premarket trading Tuesday, pacing the Dow Jones Industrial Average's early gainers after the equipment maker posted its widest profit beat in five years. The advance put the stock on track to add about 463 points to the Dow. It also put Caterpillar on pace for its biggest one-day gain since it rallied 9.9% on April 30.
Total revenue rose 24% from a year ago to $20.54 billion, beating the average analyst estimate of $19.68 billion compiled by FactSet. Sales volumes contributed $3.11 billion of the increase. Price increases accounted for $595 million of the growth.
As a result, net income climbed 65% to $3.59 billion. Adjusted earnings per share rose to $8.17 from $4.72, topping the FactSet consensus of $6.22.
Data centers drive segment growth
Power and energy sales grew 17% to $8.24 billion, boosted by sales of large engines, turbines and turbine-related services used primarily for data centers. Construction-industries revenue jumped 35% to $8.35 billion as data-center investment contributed to construction spending levels. Resource industries sales rose 20% to $4.65 billion, also above expectations.
Backlog swells on AI infrastructure demand
Caterpillar's order backlog reached $72 billion, up 92% from a year earlier, Investor's Business Daily reported. The company has become a bellwether for the AI infrastructure boom amid soaring demand for its gas turbines to power data centers, and construction was its biggest growth driver for the quarter. Looking ahead, Caterpillar raised its full-year revenue growth guidance to "mid-to-high teens" percentage growth from "low double-digit" growth.
Regulatory pushback clouds the outlook
However, Baird downgraded CAT to neutral on Wednesday, citing New York's new data-center moratorium as a sign of regulatory pushback that could slow order growth in 2027 and 2028. Governor Kathy Hochul signed an executive order on July 14 pausing state environmental permits for hyperscale data centers for up to a year, targeting facilities with the capacity to consume 50 megawatts of power.
In Texas, Governor Greg Abbott said on Monday that data-center-driven load growth could endanger the reliability of the state's power grid, and asked regulators to audit facilities' reliance on the grid and water resources before further projects proceed.
Despite Tuesday's rally, Caterpillar's stock remains well off its highs. Shares have fallen 22.1% from their June 30 record close of $1,064.90. The stock had still surged 44.9% in 2026 against an 11% gain for the S&P 500 through Monday's close.
Sources: MarketWatch, Investor's Business Daily
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