Caterpillar lifts 2026 sales growth forecast as AI buildout powers on

By Nandan Mandayam

Aug 4 (Reuters) - Caterpillar ‌raised its annual ​revenue growth ​forecast after beating second-quarter profit estimates on Tuesday, benefiting from a buildout of AI data centers that has spurred demand for its power-generation and construction ‌equipment.

Shares of the company, which rose as much as 12% in early ⁠trading, were last up around 7%, on track for their best day in more than three months if gains ‌hold. Caterpillar's stock jump also ‌helped fuel a 1.8% rise in the blue-chip benchmark Dow Jones industrial index.

The company cut its full-year tariff costs forecast to around $2.2 billion from the previously expected $2.2 billion to $2.6 ​billion.

Over the last few quarters, the equipment giant has seen a surge in orders for construction equipment amid a nationwide buildout of data centers as well as the ⁠backup power equipment needed for such buildings.

"Construction leading growth in the quarter was a standout," Oppenheimer analyst Kristen Owen said. The ​stock's reaction "reflects the importance of the durability of core Caterpillar businesses in sustaining the stock's momentum."

Caterpillar's results are often seen as a bellwether ​for the industrial economy. Its quarterly earnings beat and ‌raised forecast signal that the AI-led demand boom for ancillary equipment is sustainable.

CONSTRUCTION PROWESS POWERS BEAT

In the April-to-June quarter, Caterpillar said it booked ⁠orders worth $9.4 billion, taking its order backlog to $72.1 billion.

Overall revenue grew 24% to $20.54 billion in the quarter ending June 30. Core construction segment revenue grew 35% in that period on strong retail sales, particularly ⁠in top market North America, where it recorded a 50% jump.

"Non-residential investment in critical infrastructure programs, heavy ​construction and data centers is contributing to overall construction spending levels," CEO Joe Creed told analysts in an earnings call.

The power and energy arm, meanwhile, posted 17% growth in revenue. The two segments accounted for ‌a combined 81% of Caterpillar's total revenue.

The company builds power generators and backup power equipment under its power & energy segment, while its construction ‌industries segment manufactures excavators and bulldozers.

Caterpillar also said it recorded an expected tariff recovery of $392 million ⁠in the second quarter.

It reported adjusted ‌per-share profit of $8.17, compared with $4.72 ​per share a year earlier, well above analysts' expectation of $6.20 per share, according to data compiled by LSEG.

(Reporting by Nandan Mandayam in Bengaluru; Editing by ‌Pooja Desai)

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