Can CAT Stock Surge Again On A $72B Data Center Backlog

You want to know what could send Caterpillar (CAT) stock higher again. For one part of Caterpillar, buyers are not the problem. Some customers of its Power & Energy business are already placing orders as far out as 2030. That business-formerly Energy & Transportation, now Power & Energy-was Caterpillar's largest segment by revenue in fiscal 2025, so how fast it fills those orders is critical to the company's performance. So what is Caterpillar building to fill them?

Caterpillar Is Adding Power Engine Capacity

Caterpillar is adding capacity to make power equipment, because demand runs ahead of what its factories can ship. Gas engines that run as a site's main power source show this clearly. For those engines, management said the wait for new orders reaches the back half of 2028 and into 2029.

A simple example with made-up numbers shows why that matters. Suppose a plant can build ten engines a year, and customers order thirty. Sales stay at ten engines until the plant can build more. So for a sold-out business, new capacity is what turns orders into sales.

Caterpillar's own figures already show demand of this kind. In Power & Energy, power generation sales to users grew 72% in Q2 FY2026 from a year earlier. Management tied that growth to very strong demand for large generator sets and turbines used in data centers.

The next piece of capacity is a restart. Caterpillar is resuming production of its 10-megawatt gas engine. Management plans to bring about 1.5 gigawatts of capacity back online with it. The next question is how much that restart can add at a company of Caterpillar's size.

The Restart Lands In Caterpillar's Power & Energy Segment

The restart adds capacity directly to Power & Energy as the segment works to meet record backlogs. On its own, the restart adds about 1.5 gigawatts of capacity to a company generating $74.7 billion in trailing twelve-month revenue, though management has not stated how much revenue that capacity represents.

Power & Energy sold $32.2 billion in fiscal 2025, up 11.6% from fiscal 2024. That equals about 43% of Caterpillar's revenue over the past twelve months. Management also expects to raise output in the second half of 2026 as its wider expansion plans progress.

Orders across the whole company have run ahead of sales. Caterpillar's backlog, the orders it has not yet delivered, reached $72 billion in Q2 FY2026. That was up 92% from a year earlier.

The stock has not kept pace with the business lately. Caterpillar shares fell 17.5% over the past three months, while the S&P 500 gained 5.6%. Even after that fall, the stock trades at 34.9 times its past year's earnings, against 22.1 for the S&P 500. So the price still appears to assume that strong growth continues. That puts the weight on whether data center buyers keep ordering beyond the next few years.

Will Caterpillar's Data Center Orders Hold Up Later?

Caterpillar's data center orders look firm for now, but the later years are less certain. On the Q2 FY2026 call, a concern came up about AI and data center demand in later years. Management answered that no one is slowing down at the moment. It added that customers are asking for more units if Caterpillar can make them.

One gap remains. On the same call, management did not break down how much of the backlog came from large awards versus broad demand. So you cannot yet tell if the backlog comes from a few big buyers or many smaller ones.

The first sign will come within months. Shipments of the restarted 10-megawatt engine are expected to begin in the fourth quarter of 2026. Watch whether those shipments start on time, and whether Power & Energy sales keep growing. If shipments proceed on schedule and segment sales expand, it will indicate effective backlog conversion; if delays occur, investors will need to weigh whether operational bottlenecks, trade policy costs, or shifts in end-market demand are responsible.

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