Caterpillar Turned To AI As Construction Slowed — And Investors Rewarded It With Its Best Run In Years

• Caterpillar has also begun expanding its manufacturing footprint by investing in its large engine facility in Lafayette, Indiana.
• The company is providing equipment to power Joule’s High Performance Compute Data Center Campus in Utah.
• In October, Caterpillar noted that, in the Energy and Transportation segment, sales to users increased by 25% year over year, with the most significant growth coming from power generation for data center applications.

Over the last century, Caterpillar has been synonymous with hulking machines that make up the backbone of construction sites, mines, and infrastructure projects around the world. But the company's next growth chapter is being written far from quarries and job sites. 

Instead, the Irving, Texas-based manufacturing behemoth is quietly positioning itself at the heart of the artificial intelligence boom that's been reshaping global markets and economies. As demand for AI accelerates — driving massive needs for power, data centers, and resilient infrastructure — Caterpillar is finding fresh momentum not by selling more of its signature giant yellow excavators, but by enabling the physical backbone of an increasingly digital world. And that has propelled its stock toward its best annual surge in eight years.

Seeking AI For Growth

In its latest quarter, Caterpillar saw strength driven by power generation services for AI-related infrastructure. And one of the major projects that Caterpillar is working on is with Joule Capital Partners and Wheeler Machinery.

Caterpillar is providing equipment to power Joule’s High Performance Compute Data Center Campus in Utah, delivering 4 gigawatts of total energy to the Intermountain West.

The project would be powered by a fleet of Caterpillar’s latest G3520K generator sets and support equipment. The distributed generation system produces electricity and captures waste heat to power and cool next-generation, high-density server systems.

In October, Caterpillar noted that in the Energy and Transportation segment, sales to users increased by 25% year over year, with the most significant growth coming from power generation, up 33%, primarily due to demand for reciprocating engines for data center applications.

Manufacturing Expansion

To build on the strong demand for its equipment in the AI space, Caterpillar has also begun expanding its manufacturing footprint by investing in its large engine facility in Lafayette, Indiana, which recently announced a $725 million capital expansion.

Caterpillar said it was one of the largest single manufacturing investments in the company’s global history, aimed at significantly increasing engine production and meeting the nation’s growing power needs.

“Many of the engines manufactured here in Lafayette will support power generation customers by providing reliable power – keeping operations running during outages and helping meet the growing energy needs driven by AI, data centers and other critical infrastructure across America and around the world,” Jason Kaiser, Caterpillar Energy & Transportation Group President, said.

Demand for AI infrastructure has increased in recent years, with companies heavily investing in data centers as cloud computing and generative AI keep the world on its toes.

Industrial Equipment Sector’s Worries

Demand in the machinery sector has been sluggish amid an uncertain economic outlook and high borrowing costs, prompting customers to delay large-ticket purchases, such as housing-related investments.

Caterpillar and peer Deere have also struggled to pass rising costs on to customers as borrowing rates remain elevated. Adding to the pressure, both companies are now grappling with higher tariffs imposed by U.S. President Donald Trump.

Both companies import several vital components and parts for their equipment from South Asian countries. In December, Bernstein noted that 2025 was challenging for the industrial equipment sector, with street estimates falling by 5% to 10% and core end markets experiencing a classic cyclical downturn. 2026 should be a recovery year driven by monetary and fiscal policy alignment, the firm noted.

How Are Stocktwits Users Reacting?

Retail sentiment on Caterpillar dipped to ‘bearish’ from ‘neutral’ territory a month ago, with message volumes at ‘low’ levels, according to data from Stocktwits.

Sentiment on Deere fell to ‘bearish’ from ‘extremely bullish’ a month ago, with message volumes currently ‘low.’

Shares of Caterpillar have gained nearly 60% so far this year, while Deere’s stock has seen an 11% increase year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Webull’s IPO Year Was A Roller Coaster — But Revenues Climbed And Global Expansion Accelerated

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