Last year, the company's revenue reached a record high, with key facilities for data centers becoming a new growth driver for this leading construction machinery manufacturer.
According to a recent disclosure by Caterpillar (NYSE: CAT), both its fourth-quarter and full-year sales revenue in 2025 reached record highs. The financial report shows that the company achieved a full-year sales revenue of 67.6 billion US dollars, a year-on-year increase of 4%; the adjusted operating profit margin was 17.2%, down nearly 3.5 percentage points year-on-year. Among them, the fourth-quarter sales revenue reached 19.1 billion US dollars, setting a new historical record for a single quarter and exceeding the market's previous forecast of 17.9 billion US dollars. The operating profit for the quarter was 2.66 billion US dollars, a year-on-year decrease of 9%.
Caterpillar said that the main reason for the increase in sales was the rise in the sales of end-user equipment, while the decline in profits was mainly due to factors such as the increase in costs brought about by the rise in tariffs.
It is worth noting that the driving force behind the company's performance growth is shifting from traditional construction machinery to power demand led by data centers. In the fourth quarter of 2025, Caterpillar's Power and Energy division achieved sales of 9.4 billion US dollars, a year-on-year increase of 23%, accounting for more than 49% of the company's total revenue and becoming the largest sales department. The revenue profit was 1.841 billion US dollars, a year-on-year increase of 25%.
Among them, the sales of products in the power generation sector increased by 44% year-on-year. This growth was mainly driven by the sales of large reciprocating engines used in data centers. This department's business includes the production and sale of diesel and gas generators, industrial gas turbines and other products, providing power for buildings, factories and data centers.
In sharp contrast, Caterpillar's traditional core business - the Construction and Resource Industries divisions - although maintaining sales growth, faced significant pressure on profits. In the fourth quarter of 2025, the Construction division's sales reached 6.926 billion US dollars, a year-on-year increase of 15%, with operating income of 1.03 billion US dollars, a year-on-year decrease of 12%; the Resource Industries division's sales were 3.353 billion US dollars, a year-on-year increase of 13%, with operating income of 360 million US dollars, a year-on-year decrease of 24%.
Caterpillar said that the profit decline of the above two departments was mainly affected by factors such as rising costs due to the increase in tariffs. The company's tariff cost in 2025 is estimated to be about 1.8 billion US dollars, and it is expected to increase to 2.6 billion US dollars in 2026.
The fundamental force driving this structural change in performance comes from the explosive growth in the construction of artificial intelligence data centers. The requirements for the stability, reliability and immediacy of power supply in data centers have reached an unprecedented level. As a result, the demand for diesel and gas generator sets as key backup power sources has been pushed to a new high.
Industry data shows that diesel generators are one of the most stable and reliable backup power sources for data centers, accounting for approximately 20% of the infrastructure cost of data centers, with the engine being its most core component. A research report by Dongwu Securities indicates that as of 2024, the global data center diesel generator market is dominated by Cummins, MTU (a brand under Rolls-Royce), and Caterpillar, with their combined market share reaching about 56%, among which Cummins accounts for approximately 28%, and MTU and Caterpillar each hold around 14%.
According to Joe Creed, the CEO of Caterpillar, during a conference call, orders for "prime power" systems (large generators designed to provide continuous, around-the-clock power) are on the rise as data center customers seek additional on-site power to keep up with rapid growth.
To meet the surging market demand, Caterpillar announced in 2024 that it would invest approximately 725 million US dollars to expand its factory in Indiana, USA, to produce gas generator sets for data centers, with the aim of more than doubling its generator production capacity by 2030.
In addition, in November 2025, Caterpillar renamed its original Energy and Transportation division to Power and Energy division, focusing on growth in the power generation services sector, and plans to transfer its transportation business to the Resource Industries division.
This round of growth and the long-term prospects of the data center market are also reflected in the capital market. As of February 2nd, Caterpillar's intraday share price hit a record high, closing at $690.885 per share. Its share price has risen by approximately 80% in the past year, with a total market value of $323.32 billion. Morgan Stanley analysts have pointed out that Caterpillar's share price has begun to more reflect its growth attributes as an AI infrastructure stock, rather than just a traditional cyclical stock.
Joe Creed stated at the latest financial meeting that as of the end of 2025, the company's total backlog of undelivered orders reached a record high of 51 billion US dollars, with approximately 62% expected to be delivered within the next 12 months. Based on this, the company anticipates that its sales in 2026 will increase by 5% to 7% year-on-year.
Investors generally remain cautious about its 2026 targets, mainly due to the potential impact of tariff policies on its profit margins. Bank of America Securities, however, believes that Caterpillar's 7% revenue growth guidance is conservative. Given that the backlog of orders has reached a record high of $51 billion and is still increasing, the firm has raised its target price for the company from $708 to $735.