Caterpillar Tops Estimates as AI Power Demand Fuels Growth

(Bloomberg) -- Caterpillar Inc. ( CAT ) posted quarterly earnings that beat Wall Street expectations as soaring electricity needs from artificial intelligence data centers continued to drive demand for the company's power-generation equipment.

The US company posted adjusted earnings of $7.20 per share in the third quarter, according to a statement Thursday. That was higher than the $7.10 average estimate of analysts polled by Bloomberg.

Despite the earnings beat, shares of the Irving, Texas-based company fell more than 4% in premarket trading in New York immediately after the statement was released.

Caterpillar has emerged as a major beneficiary as technology companies race to set up the infrastructure needed to meet AI's enormous electricity demand. The company's power and energy segment, which builds generators, large engines and gas turbines, has grown into its largest business by sales, eclipsing the yellow excavators and bulldozers for which Caterpillar is best known.

The beat comes despite a broader pullback in the stocks tied to the AI boom. Investors have grown more cautious about the enormous sums that technology companies are spending on data centers, while rising interest rates have added to concerns about the cost of financing the buildout.

But Caterpillar's earnings indicate that demand is still robust for the equipment needed to build AI infrastructure, with the company reporting strong sales and a tight backlog of inventory.

The report follows positive results on Wednesday from GE Vernova Inc., which provides power grid equipment to electricity-intensive industries.

Caterpillar has embarked on a massive, multi-year buildout of its power equipment fleet to meet demand, with a goal to drastically expand its large-engine and gas turbine capacity. Earlier this year, it raised its sales targets for power-generation equipment on demand growth.