Caterpillar's order backlog hit a record $63 billion in the first quarter of 2026, up 79% year-over-year, with nearly $12 billion arriving in the quarter alone.
Most of the surge comes from data centers buying the company's engines and turbines for on-site power generation, a segment that grew 41% year-over-year to $2.8 billion in sales.
The company is nearly tripling its large engine manufacturing capacity through 2029 to keep pace with demand, and the stock has roughly doubled off its 52-week low, now trading at about 41 times earnings.
What happened
Caterpillar ended Q1 2026 with a record backlog of $63 billion, up $28 billion (79%) from Q1 2025, driven largely by data center demand for its engines and turbines. Power generation sales rose 41% year-over-year to $2.8 billion, with CEO Joe Creed noting that customers are committing to orders well into 2028.
Why it matters
Data centers need Caterpillar's large reciprocating engines and gas turbines to power facilities on-site, either as backup or primary power while waiting for grid connections. The company is responding by expanding engine capacity to nearly triple 2024 levels (capex running 2027–2029), betting that the power demand will sustain long enough to justify the investment.
What to watch
Caterpillar reports second-quarter results on Tuesday, Aug. 4, before market open. Investors will watch whether the backlog continues to climb and whether power generation revenue holds its growth pace—or whether regulatory pressures like New York's July moratorium on new hyperscale data centers begin to slow the pipeline.
Caterpillar ended the first quarter of 2026 with a record order backlog of $63 billion, up $28 billion or 79% from the first quarter of 2025, with all three of its primary segments contributing to the growth. Within a single quarter, the company added almost $12 billion in new orders, signaling that demand is accelerating rather than stabilizing.
The growth is no longer primarily driven by traditional construction and mining. Instead, a major share comes from data centers that require Caterpillar's large reciprocating engines and gas turbines to provide power. These engines serve two purposes: as backup power when the electrical grid fails, and as primary power for data center facilities unwilling or unable to wait for grid connections. Power generation sales, one component of Caterpillar's power and energy segment, rose 41% year-over-year in Q1 2026 to $2.8 billion, up from $2.0 billion in Q1 2025. The growth came specifically from large reciprocating engines and turbines driven by data center applications, placing power generation on an annual run rate above $11 billion. Companywide, sales and revenues rose 22% year-over-year to $17.4 billion, while adjusted earnings per share climbed 30% to $5.54 from $4.25.
In response to this demand surge, Caterpillar is expanding its large reciprocating engine capacity to nearly triple 2024 levels, with most of the additional capital expenditures scheduled between 2027 and 2029. CEO Joe Creed stated on the company's first-quarter earnings call that "customers are committing to longer-term orders with some orders well into 2028," a timeframe that explains why the total backlog has swelled so quickly. A year earlier, the backlog stood at about $35 billion; roughly $23 billion of the increase since then arrived in just the last two quarters, demonstrating accelerating momentum.
The market has responded to this shift in business composition. Caterpillar shares have roughly doubled off their 52-week low to about $815 per share, though they would need to climb more than 30% to return to their high. Investors are now pricing the company at about 41 times earnings—a multiple more typical of AI infrastructure plays than of traditional cyclical equipment makers. The company faces a near-term test on Tuesday, Aug. 4, when it reports second-quarter results before market open. Investors will scrutinize whether the backlog continues to climb and whether power generation revenue sustains its 41% growth rate. One headwind emerged in July when New York imposed the nation's first statewide moratorium on new hyperscale data centers, pausing environmental permits for large projects not already deemed complete for up to a year. Should other states follow suit, some portion of the order pipeline extending into 2027 and 2028 could shrink or slip. A long-dated backlog can also be rescheduled or canceled, adding execution risk to what otherwise appears to be a structural tailwind.
Caterpillar's transformation from a cyclical construction-equipment maker into a critical infrastructure play for AI has accelerated sharply. The $63 billion backlog represents visibility that the company rarely had in its historical business—the equivalent of more than three and a half quarters of revenue sitting on the books. What makes this shift significant is that nearly half the recent growth came in just the last two quarters, and CEO Joe Creed's comment that customers are committing to orders "well into 2028" suggests the acceleration is not yet exhausted.
The power generation segment's 41% year-over-year growth to $2.8 billion in Q1 2026 (up from $2.0 billion the prior year) illustrates both the scale and speed of data center demand for on-site power. As grid connection timelines stretch and hyperscale facilities multiply, the need for Caterpillar's engines—whether for backup or primary power—has become a structural tailwind. The company's decision to nearly triple engine capacity, with capex weighted to 2027–2029, represents management's confidence that this demand will persist.
However, the July moratorium imposed by New York on new hyperscale data center permits introduces regulatory risk that was absent earlier in the year. If additional states follow, some portion of the 2027–2028 order pipeline could slip or shrink. At a valuation of about 41 times earnings—more typical of AI infrastructure companies than cyclical equipment makers—Caterpillar's stock may already reflect the optimistic scenario of uninterrupted demand growth.
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