Caterpillar and Cummins Could See Revenue Boost from AI Data Center Expansion

• UBS analysts predict generator sales revenue could nearly double for both companies, adding significant profits over the next three years.

• Data center growth indirectly supports Caterpillar’s construction machinery and Cummins’ truck engines through infrastructure needs.

• Caterpillar shares are up 45% this year, Cummins up 20%, fueled by AI-related power demands from firms like Nvidia and Microsoft.

Discover why Caterpillar and Cummins stocks are rising amid AI data center boom. Explore revenue forecasts and investment opportunities in heavy machinery for tech infrastructure. Read now for key insights.

Why Are Caterpillar and Cummins Stocks Rising in 2025?

Caterpillar and Cummins stocks are experiencing significant gains primarily due to the rapid expansion of data centers across the United States, which is increasing demand for backup power solutions essential for AI technologies. Investors, eager to capitalize on the AI wave, are turning to these established manufacturing firms that provide the critical machinery needed to support such infrastructure. According to financial analyses, this trend could lead to substantial profit boosts for both companies over the next three years.

How Is Data Center Expansion Boosting Demand for Heavy Machinery Makers?

The surge in data centers is directly fueling the need for reliable backup generators, a market segment where Caterpillar Inc. and Cummins Inc. hold strong positions. UBS analyst Steven Fisher, in a recent client note, projected that revenues from generator sales to U.S. data centers could nearly double for each company, potentially contributing around $1.5 billion in additional revenue. This estimate builds on a relatively modest current base but highlights the transformative potential of AI-driven infrastructure.

While generators represent a growing opportunity, the core operations remain vital: Caterpillar’s construction equipment and Cummins’ truck engines continue to form the backbone of their earnings. The ongoing build-out of data centers also creates indirect benefits, as massive facilities require extensive site preparation, earthmoving, and maintenance equipment—areas where Caterpillar excels. For Cummins, the integration of engines in heavy-duty applications ties into the broader logistics supporting data center construction.

Expert insights from Barclays analyst Adam Seiden further underscore this momentum, forecasting that Caterpillar could triple its annual data center power revenue by 2030, largely through primary electricity generation solutions. Companies like Nvidia, Microsoft, and Amazon are scaling their AI capabilities, which demands not only backup power but also sustainable energy systems to handle uninterrupted operations. Fisher emphasized, “Hungry for exposure to a boom in artificial intelligence, investors have piled into shares of old-line industrial companies that make equipment used to generate power for data centers.” This investor enthusiasm has propelled Caterpillar’s shares up 45% in 2025 and Cummins by 20%, reflecting market confidence in their AI-adjacent growth.

However, the sector is not without challenges. Analysts from UBS caution that while generator sales are promising, they constitute a small fraction of overall revenue—less than 5% for both firms currently. Core businesses in construction and transportation must navigate economic cycles, including potential slowdowns in non-tech sectors. Additionally, the push for sustainable energy could accelerate adoption of hybrid or electric alternatives, prompting Caterpillar and Cummins to invest in greener technologies to maintain competitiveness.

Frequently Asked Questions

What Revenue Impact Will Data Centers Have on Caterpillar and Cummins Profits?

Data centers are expected to drive a near-doubling of backup generator revenues for Caterpillar and Cummins, adding approximately $1.5 billion each over the next three years, per UBS estimates. This growth stems from heightened AI infrastructure needs, though it supplements rather than replaces their primary construction and engine sectors, ensuring balanced profitability.

Are Caterpillar and Cummins Stocks a Good Investment Amid the AI Boom?

Yes, Caterpillar and Cummins stocks offer solid exposure to the AI data center expansion, with shares rising 45% and 20% respectively in 2025 due to power equipment demand. Investors should consider their established market positions and analyst forecasts for revenue growth, while monitoring energy sector volatility for long-term stability.

Key Takeaways

• Revenue Doubling Potential: UBS projects Caterpillar and Cummins could see generator sales to data centers nearly double, injecting $1.5 billion in revenue each from AI infrastructure support.
• Indirect Business Benefits: Data center construction boosts demand for Caterpillar’s machinery and Cummins’ engines, enhancing core operations beyond power generation.
• Investment Opportunity with Caution: While stocks have surged this year, analysts advise tempering optimism as generator sales remain a minor revenue share—focus on diversified industrial strength for sustained gains.

Conclusion

The rise in Caterpillar and Cummins stocks exemplifies how the AI-fueled data center expansion is reshaping opportunities for traditional heavy machinery manufacturers. With authoritative projections from UBS and Barclays highlighting revenue growth through backup generators and infrastructure support, these companies stand to benefit substantially in the coming years. As power demands evolve with technological advancements, investors should stay informed on energy trends and infrastructure developments to make strategic decisions, positioning themselves for the ongoing AI revolution.