Caterpillar’s profits surge as AI boom drives energy equipment demand

Caterpillar’s profits surge as AI boom drives energy equipment demand

Its shares are up about 60 percent so far this year

American engine equipment manufacturing company Caterpillar has topped third-quarter profit and revenue estimates, as a boom in artificial intelligence (AI) technologies drove demand for its energy apparatus.

The industrial equipment maker's energy and transportation unit has fueled much of the company's growth in recent quarters.

While President Donald Trump's focus on energy projects has also aided the segment, mining equipment, such as excavators and giant shovels, has contributed 40 percent to Caterpillar's turnover.

Ryan Keeney, analyst at Third Bridge, remarked, "Power-generation sales are expected to continue, as CAT maintains their market leadership in backup power generation for data center applications."

The unit claimed a 17 percent rise in third-quarter sales to $7.2 billion.

However, while industrial machinery makers, including Caterpillar, are dealing with higher costs from Trump's expansive tariffs on imports, the weak demand and elevated interest rates are limiting their ability to pass on the burden to customers.

The company stated that it expected an annual tariff between $1.6 billion and $1.75 billion, compared with its prior expectation of $1.5 billion to $1.8 billion.

As finance chief, Andrew Bonfield, analysed that tariff headwinds were expected to be larger in the final quarter of the year, compared to the third quarter.

During the second quarter, companies worldwide flagged a combined annual financial hit of between $16.2 billion and $17.9 billion and nearly $15 billion for 2026.

The company, seen as a bellwether for the global industrial economy, reported quarterly revenue of $17.6 billion, beating Wall Street's expectation of $16.77 billion. Assisted by price hikes, its construction segment posted a 7 percent rise in revenue to $6.76 billion.

Caterpillar reported a quarterly adjusted per share profit of $4.95, topping the average estimate of $4.52. Its shares are up about 60 percent so far this year, outperforming the S&P 500 Industrials index's 17 percent increase.