Critical Minerals: How Data Centres are Boosting Caterpillar

Caterpillar posted its strongest single-day share price performance in 17 years on 4 August after its second quarter results exceeded analyst expectations across most metrics.

Its shares rose 12% and contributed to broader gains across the Dow Jones Industrial Average.

The company reported revenue of US$20.54bn for the quarter, representing a 24% increase year on year. Adjusted earnings reached US$8.17 per share against consensus estimates of US$6.20, while operating profit climbed to US$4.3bn.

Record backlog drives valuation

Caterpillar says its order backlog reached US$72.1bn at the end of the quarter, a 92% increase compared to the same period in 2025, with some contracts extending through to 2030.

The backlog shows sustained demand for construction and power equipment tied to data centre infrastructure.

In addition to data centres' construction demands, they also require significant amounts of hardware using significant amounts of metals and minerals for power distribution, server architecture, cooling systems and data storage.

Caterpillar's construction division reported a 35% increase in sales during the quarter and North American sales within this segment rose 50% year on year.

Its power and energy division grew 17% overall with sales of large generator sets and turbines used in data centre operations increasing 72% compared to the prior year period.

Capital expenditure plans expand

Chairman and CEO Joe Creed told analysts that demand from infrastructure programmes and data centre construction is contributing to spending levels across the construction sector.

Joe raised the company's long-term annual growth target to between 6% and 9% through 2030.

The company plans to expand capacity at engine manufacturing plants to accommodate the order pipeline. Construction and power equipment now account for more than 80% of the company's total revenue.

CFO Kyle Epley, who assumed the role in May, said 59% of the US$72.1bn backlog is scheduled to ship within 12 months. This proportion has remained stable for three consecutive quarters.

Regulatory headwinds

Caterpillar revised its full-year tariff expense estimate to approximately US$2.2bn. The adjustment could mean lower cost pressures than previously forecast.

Data centre development faces regulatory challenges in several jurisdictions. Moratoriums on new projects have been implemented in Seattle and parts of New York state, while Florida introduced legislation to shield consumers from data centre-related power costs.

According to Baird analysts, additional restrictions could slow investment in data centre infrastructure.

A reduction in spending by large technology companies would likely reduce Caterpillar's order intake.