Caterpillar surges as AI demand drives record revenue

Caterpillar shares soared 11% to $923 in pre-market trading on Tuesday after the heavy equipment maker posted record quarterly revenue, powered in part by rising demand for power-generation equipment tied to the AI infrastructure boom.

The company reported second-quarter sales of $20.5 billion, up 24% from a year earlier and comfortably ahead of Wall Street expectations of $19.3 billion. The result marks the first time in Caterpillar’s history that quarterly sales and revenue have topped the $20 billion mark.

The strong performance was driven by an additional $3.1 billion in sales volume, while higher pricing contributed another $595 million. A key growth engine was Caterpillar’s power-generation business, which benefited from surging investment in data centers and other infrastructure needed to support artificial intelligence workloads.

That AI-linked demand added momentum to broader gains across Caterpillar’s three main business divisions, underscoring how the industrial giant is becoming an indirect beneficiary of the global scramble to build out computing capacity.

Earnings rose even faster than revenue. Adjusted earnings per share jumped 73% to $8.17, far above the $6.17 analysts had been expecting. On a reported basis, earnings per share climbed to $7.77, compared with $4.62 in the same period last year.

Margins also improved significantly, highlighting stronger execution and operating leverage. Caterpillar’s operating margin expanded to 20.9%, up from 17.3% a year ago, while its adjusted operating margin increased to 21.9% from 17.6%.

The company did face higher restructuring costs during the quarter, linked to the disposal of certain businesses outside the United States. Still, those charges were not enough to detract from what was otherwise a standout set of results.

Chief executive Joe Creed hailed the milestone, saying it was the first quarter in Caterpillar’s history to generate more than $20 billion in sales and revenues.

Caterpillar also delivered strong cash generation. Operating cash flow came in at $4.4 billion for the quarter, and the company ended the period with $6.7 billion in cash.

Shareholders benefited directly from that strength. Caterpillar returned $2.2 billion during the quarter, including $1.5 billion through share repurchases and $700 million in dividends.

For investors, the results reinforce Caterpillar’s positioning at the intersection of traditional industrial demand and one of the fastest-growing themes in technology: the massive buildout of AI infrastructure. While best known for construction and mining equipment, the company is increasingly seeing upside from the power systems that help keep data centers and digital infrastructure running.

The market’s sharp reaction suggests investors see Caterpillar as more than just a cyclical machinery manufacturer. With AI-related spending rippling well beyond chipmakers and cloud providers, companies supplying the physical backbone of that expansion are starting to capture the spotlight as well.