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Caterpillar’s shares have been under pressure as investors seek reassurance that the company can sustain the momentum of revenue and earnings growth driven by data centre customers.David Becker/Reuters
Caterpillar CAT-N narrowly beat third-quarter profit estimates on Thursday, buoyed by AI-driven demand for power-generation equipment, but its unchanged annual sales forecast raised questions over how long the data-centre boom can drive growth.
Shares of the company, a bellwether for the global industrial economy and known for its big yellow bulldozers and large mining trucks, fell over 10 per cent premarket after the results.
Caterpillar has benefited from the AI-driven expansion of data centres across the U.S., which boosted demand for construction equipment and generators. However, investor sentiment has weakened amid growing opposition to data centres and calls to slow AI development.
Its order backlog for the third quarter swelled to a record US$78.1-billion, up US$6-billion from the previous quarter. But the increase was slower than the pace seen earlier this year.
Caterpillar’s shares have been under pressure over the last few months, dropping more than 20 per cent since August, as investors seek reassurance that the company can sustain the momentum of revenue and earnings growth driven by data centre customers.
The company expects 2026 revenue to grow in the mid-to-high teens range, while analysts expect growth in the high teens percentage, or roughly 18 per cent.
Caterpillar also kept the annual tariff cost forecast of around US$2.2-billion unchanged.
Its quarterly revenue rose 17 per cent to US$20.7-billion, beating analysts’ forecast of US$20.55-billion, according to data compiled by LSEG.
The company reported an adjusted profit of US$7.20 per share for the quarter through September, compared with US$4.95 per share a year earlier and analysts’ average expectation of US$7.08.
For the last four quarters, the company has topped Wall Street’s earnings expectations by no less than 40 cents, and last quarter it beat profit estimates by nearly US$2 per share.
Oppenheimer analyst Kristen Owen said the quality of the company’s earnings beat gives investors “a chink in the CAT armour” despite Caterpillar’s broad-based growth.
Caterpillar said its third-quarter operating profit included US$128-million in benefits related to IEEPA tariff recoveries.