Why Caterpillar (CAT) Is Up 6.9% After Surging AI Data Center Demand for Its Turbines

• Caterpillar presented at the Permian Power Connection Conference in Midland, Texas on September 29, 2025, highlighting expanding demand for its power-generation turbines amid the surge in AI-driven data center infrastructure.
• This new growth channel beyond construction and mining has captured investor attention as the company benefits from the link between artificial intelligence, electricity demand, and critical equipment supply.
• We'll explore how surging demand for Caterpillar's turbines from AI-related data centers could influence the company's long-term investment outlook.

Find companies with promising cash flow potential yet trading below their fair value.

Caterpillar Investment Narrative Recap

For shareholders, the core belief in Caterpillar rests on its position at the intersection of global infrastructure demand and rising needs from new verticals like AI-driven data centers. While excitement around power-generation turbines has provided a short-term boost, the most important catalyst remains the continued uptick in orders related to data center expansion. The biggest risk is ongoing uncertainty around tariffs, which could weigh on margins; this week's headlines do not materially change that risk profile in the near term.

Of Caterpillar's recent announcements, its partnership with Hunt Energy to deliver power solutions for data centers stands out as most relevant. This collaboration directly supports the expanding turbine business spotlighted at the Permian Power Connection Conference, reinforcing the links between AI infrastructure buildout and high-margin growth opportunities for the company.

On the other hand, investors should also be mindful of persistent tariff risks and how new trade policy actions could disrupt earnings momentum if...

Read the full narrative on Caterpillar (it's free!)

Caterpillar's narrative projects $74.0 billion in revenue and $13.5 billion in earnings by 2028. This requires 5.5% yearly revenue growth and a $4.1 billion earnings increase from the current $9.4 billion.

Uncover how Caterpillar's forecasts yield a $458.91 fair value, a 8% downside to its current price.

Exploring Other Perspectives

Twenty-four members of the Simply Wall St Community place Caterpillar’s fair value between US$291.79 and US$508.86 per share. With new order activity in data center power generation, there are both bullish and cautious views worth exploring for a full picture.

Explore 24 other fair value estimates on Caterpillar - why the stock might be worth as much as $508.86!

Build Your Own Caterpillar Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Caterpillar research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Caterpillar research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Caterpillar's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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