Caterpillar raised its 2026 sales-growth forecast after a record second quarter, sending shares higher and lifting Dow Jones futures. AI-driven demand for construction and power equipment drove the beat, but a New York data-center moratorium is now drawing analyst caution about Caterpillar's order growth in 2027 and 2028.
Caterpillar raised its annual revenue growth forecast on Tuesday after beating second-quarter profit estimates. The news sent shares up 11% in premarket trading. It also pushed Dow Jones futures up 0.6%. Caterpillar's results are often seen as a bellwether for the industrial economy, and the beat signals that AI-driven demand for power and construction equipment remains sustainable.
Record backlog anchors the quarter
The equipment maker's order book swelled to a record $72.1 billion in backlog, up 92% from a year earlier. It booked $9.4 billion in new orders during the April-to-June quarter. According to Reuters, Oppenheimer analyst Kristen Owen said the construction segment's strength stood out: "Construction leading growth in the quarter was a standout." She added that the rally reflects how durable Caterpillar's core businesses are in sustaining its momentum.
Construction and power segments drive the beat
Total revenue grew 24% to an all-time high of $20.54 billion in the quarter ended June 30. The construction segment expanded 35%, with North American sales climbing 50%. The power and energy division, which builds generators and backup equipment for data centers, grew 17% in revenue. Together, the two units made up 81% of Caterpillar's total revenue.
Adjusted per-share profit reached $8.17, up from $4.72 a year earlier and above the $6.20 per share analysts had expected, according to LSEG data. Caterpillar also cut its full-year tariff cost forecast to around $2.2 billion, down from a prior range of $2.2 billion to $2.6 billion. The stock is up 38% year to date, helping buoy the Dow Jones Industrial Average to record highs.
Data-center pushback clouds the outlook
Not everyone is convinced the rally has room to run. Baird downgraded CAT to neutral on Wednesday, warning that a new data-center moratorium in New York could slow Caterpillar's order and backlog growth in 2027 and 2028. Governor Kathy Hochul signed an executive order on July 14 pausing state environmental permits for hyperscale data centers with the capacity to consume 50 megawatts of energy, for up to a year.
Texas Governor Greg Abbott, meanwhile, said Monday that load growth from the data-center buildout could endanger the reliability of the state's grid, and asked regulators to audit all data centers in the works. CAT stock still jumped more than 10% to 917.50 Tuesday, leading Dow Jones advancers, even though shares remain 22.7% off their June 30 record high.
Sources: Reuters, Investor's Business Daily, Yahoo Finance
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