At 100 years old, Caterpillar’s growth is now led by powering data centers
As the storied construction giant celebrates its centennial anniversary in 2025, Caterpillar’s growth has evolved to fit the economic zeitgeist—now much of its new business is focused on powering the data center boom.
In fact, 2024 was the first year the “energy and transportation” segment of Caterpillar (ranked 64 in the Fortune 500) easily outpaced the tried-and-true “construction industries” business. Energy and transportation accounted for $28.9 billion in annual revenues versus $25.5 billion for construction.
“It’s the biggest and fastest growing part of Caterpillar. The growth is really driven by energy demand” said Jason Kaiser, Caterpillar group president for energy and transportation, joking that most people think about construction—or even hats and boots—when they think about Caterpillar.
“Power generation, which is where data centers fall, has been the main part of that growth,” Kaiser told Fortune. “We’re focused on investing to take advantage of that as a company.”
The energy part of the business first began to consistently outpace construction in the fourth quarter of 2023, coinciding with both burgeoning data center demand and increasing equipment needs for electrifying oil and gas production activities.
Driven in part by the AI revolution, after years of flat power usage, Caterpillar sees U.S. electricity demand growing by 25% from 2023 to 2035—or 60% from 2023 to 2050—and the rest of the world is rising too, citing date from the International Energy Agency.
Data centers need both primary power generation and backup power. It’s no coincidence that Caterpillar manufactures the equipment for both. That’s why Caterpillar has been increasing its manufacturing capacity, especially for gas-fired turbines at its California facilities. Caterpillar’s engine manufacturing capacity for data centers is increasing 125% from 2023, Kaiser said.
Fueling the AI race
Caterpillar, which sees its stock trading near all-time highs and a market cap just below $200 billion, is providing the turbines for a data center’s on-site primary power, generator sets for backup power, and microgrids that can combine fossil fuel-based power with solar, battery storage, and more.
“Data centers are getting really big,” Kaiser said. “It might be 125 megawatts [of power demand]. That’s 100,000 homes worth of electricity. Each of our gen (generator) sets for backup is 2 to 4 megawatts. You can do the math and see the really large lineup of backup power that’s there.
“In the case where a data center doesn’t have a utility feed, we can bring industrial gas turbines in, mobilize them into a power plant that provides 24/7 power for them onsite, and be the primary power until they do get the utility there.”
The most popular on-site turbines now for data centers are a 38-megawatt, gas-fired turbine that Kaiser deemed a “really good fit” for the AI construction boom.
One of the biggest industry concerns in the race to build data centers is the long queue to acquire gas-fired turbines for power. Caterpillar is trying to get ahead of the problems.
“The supply chain has been tough. A lot of the investment is in that capacity,” Kaiser said. “Some of it’s our own factory and our own machines, but some of it’s in the supply chain to help our suppliers invest and make sure that we’ve got the supply chain ready to do that.”
As such, Caterpillar is working closely with its hyperscaler clients on long-term planning, he said. “It helps address the question about visibility into the queue. We have multi-year views of their demand. We plan with them on a weekly or monthly basis and work to stay really close to them to ensure that we meet their needs over years. It’s what gives us confidence to make that level of investment in capacity as well.”
Power generation makes up one-third—and growing—of Caterpillar’s energy and transportation segment. The Oil and gas business is the next biggest component at 29%. The rest is focused on industrial engines, and marine and rail transportation—from marine vessel engines to rail cars.
But the oil and gas segment pairs closely with power. Most of the oil and gas growth is through natural gas production for both data center power and for liquefied natural gas exports. Caterpillar provides equipment from powering oil and gas drills to the gas compression that helps transport the products to power plants. The oil and gas sector has demanded more equipment to save money and reduce emissions by switching to more electric power and less diesel-fired generation.
“We have that participation through the value stream,” Kaiser said, “from drilling the well to burning it to make electricity on the other end after it’s moved through the system.”