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Caterpillar (CAT) Finds a New Growth Engine in Data Center Power Demand

Caterpillar Inc. (NYSE:CAT) is included among the 20 Best Performing Dividend Stocks in 2025.

Power-hungry AI projects have turned into a clear tailwind for Caterpillar Inc. (NYSE:CAT). The company sells engines and generators to a wide range of customers, and that side of the business is getting more attention. For decades, Caterpillar built much of its roughly $65 billion operation around massive yellow dump trucks, bulldozers, and other heavy equipment used in mining and construction. That mix is starting to change. The power and energy unit is now Caterpillar’s fastest-growing segment. Demand is rising as data center operators invest heavily to support AI workloads.

Management expects this business to help lift annual sales growth to a 5%–7% range through 2030. That compares with about 4% growth in recent years. Investors have responded positively, pushing the stock into the ranks of the top performers on the Dow this year. To meet demand, Caterpillar Inc. (NYSE:CAT) is stepping up spending in a way it hasn’t done in about 15 years. The company is investing $725 million at its Lafayette, Indiana, plant to increase production of piston-driven engines used in generators. It is also working toward more than doubling turbine engine capacity by 2030. This marks a noticeable shift. In recent years, CAT closed facilities and leaned hard into cost controls to lift margins. Now the focus is on expanding capacity where demand is strongest.

Caterpillar Inc. (NYSE:CAT) and other generator makers have also benefited from the broader enthusiasm around AI-related stocks. Caterpillar shares are up nearly 61% so far this year, more than three times the gain of the S&P 500.

While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CAT and that has a 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 14 Best Pharma Dividend Stocks to Buy in 2026 and 14 Best Dividend Aristocrats to Invest in Heading into 2026.

Disclosure: None.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

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What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

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