Caterpillar (CAT) Stock Soars, but One Growth Driver Stands Out

TLDR

• CAT stock rose more than 10% after Caterpillar reported stronger-than-expected second-quarter earnings and revenue.
• Adjusted earnings reached $8.17 per share, beating the $5.71 estimate.
• Quarterly sales and revenue climbed 24% to a record $20.5 billion.
• Caterpillar’s order backlog reached a company record of $72.1 billion.
• Power and Energy sales rose 17% as data-center and AI-related demand increased.

Caterpillar (CAT) stock rose more than 10% on Tuesday after Caterpillar reported stronger second-quarter 2026 results and raised its full-year sales outlook. The equipment maker benefited from higher demand across construction, mining, and power markets. Growth in its power unit also reflected rising demand from data centers linked to artificial intelligence.

Caterpillar posted adjusted earnings of $8.17 per share, above the $5.71 estimate. Sales and revenues reached $20.5 billion, beating the $18.36 billion forecast. Revenue increased 24% from $16.6 billion a year earlier.

CAT Stock Gains After Strong Earnings

CAT stock traded at $918.42 in premarket trading, up 10.65%. Investors responded to the earnings beat, stronger margins, and improved sales guidance.

Caterpillar Inc., CAT

GAAP diluted earnings rose to $7.77 per share from $4.62. Adjusted earnings increased to $4.72 per share. GAAP profit climbed to $3.59 billion from $2.18 billion.

Operating profit increased 50% to $4.30 billion. The operating margin rose to 20.9% from 17.3%. The adjusted operating margin reached 21.9%, compared with 17.6% a year earlier.

AI Demand Supports Power Unit Growth

Power and Energy sales increased 17% to $8.24 billion. Segment profit rose 30% to $2.03 billion, while the margin improved to 24.6%.

Caterpillar reported higher sales of large engines, turbines, and related services. Much of the demand came from data-center projects, where operators need more power capacity for AI systems.

Construction Industries sales jumped 35% to $8.35 billion. Segment profit rose 57% to $1.95 billion. Resource Industries sales grew 20% to $4.65 billion, while profit increased 23% to $693 million.

Financial Products revenue rose 10% to $1.15 billion, while segment profit increased 32% to $328 million. Management also reported softer Middle East construction equipment sales during the quarter overall.

Record Backlog Lifts Sales Outlook

Caterpillar’s order backlog reached a record $72.1 billion. It increased by $34.6 billion from a year earlier and by $9.4 billion from the previous quarter.

Higher sales volume added $3.11 billion to revenue growth. Favorable pricing contributed another $595 million. Management said strong order rates supported momentum across its three main segments.

The company now expects full-year sales growth in the mid-to-high teens. Its previous forecast called for low-double-digit growth.

Cash Flow Funds Shareholder Returns

Enterprise operating cash flow reached $4.4 billion. Machinery, Power and Energy operating cash flow totaled $5.7 billion, while free cash flow came to $5.1 billion.

Caterpillar ended the quarter with $6.7 billion in cash. It returned $2.2 billion to shareholders through $1.5 billion in buybacks and $700 million in dividends.

The company expects about $2.2 billion in tariff costs, $3.5 billion in capital spending, and up to $350 million in restructuring costs.

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