Caterpillar Raises Outlook as AI-Led Demand Drives Power and Construction Growth

May 7: Caterpillar has raised its annual and long-term revenue forecasts, supported by strong demand from AI-led data centre expansion and infrastructure development. The company's shares rose nearly 9.7% during the past week, touching a record high.

Strong Q1 Performance

During the January-March quarter, Caterpillar posted earnings of USD 5.54 per share, exceeding analyst expectations of USD 4.62 per share. Total revenue grew 22% to USD 17.42 billion, marking its strongest growth in over four years and surpassing estimates of USD 16.61 billion. The construction business reported a 38% rise in revenue to USD 7.16 billion, while the power and energy segment recorded a 22% increase to USD 7.03 billion.

AI-Led Demand Driving Growth

Caterpillar now expects its power generation equipment sales to triple by 2030 compared to 2024 levels, a higher projection than its earlier estimate of doubling over the same period. For the full year, the company expects revenue growth in the low double-digit percentage range, up from its earlier projection of around 7%. Long-term annual revenue growth outlook for 2024-2030 has been revised to 6-9%, from the previous 5-7% range.

Tariff Impact Revised Downward

Caterpillar has revised its expected tariff impact for the year to between USD 2.2 billion and USD 2.4 billion, lower than its earlier estimate of USD 2.6 billion. The reduced impact was due to a shift to Section 232 levies following a Supreme Court ruling that struck down tariffs imposed under the International Emergency Economic Powers Act. Higher sales volumes and improved pricing supported performance, though gains were partly offset by increased manufacturing costs of around USD 710 million largely due to tariffs.