Caterpillar Restarts 10-MW Gas Engine Line as Data Center Demand Surges
Caterpillar’s power generation retail sales jumped 72% year over year last quarter, pushing total company sales and revenue to a record $20.5 billion, Utility Dive reports. The surge is driven largely by data center customers ordering large generator sets and turbines.
Market Impact
The Texas-based equipment maker saw sales and revenue climb 24% compared to $16.6 billion a year earlier, according to Utility Dive’s coverage of Caterpillar’s second-quarter earnings call. CEO and Chairman Joseph Creed said demand from hyperscalers, along with oil and gas, mining and marine customers, is pushing orders out through 2030. About 59% of Caterpillar’s $72 billion order backlog is expected to ship within the next 12 months.
To keep up, Caterpillar is resuming production of its 10-MW medium-speed gas reciprocating engine platform, a line it shut down in 2022 over “limited industry opportunity.” The company plans to bring back 1.5 GW of capacity, with shipments starting in the fourth quarter. Caterpillar’s power and energy segment posted $8.2 billion in sales, up 17%, with segment profit up 30% to $2 billion. The construction segment also grew, with North American sales surging 50% to nearly $5.1 billion. Despite chip-stock volatility and investor concern over AI spending, Creed said “no one is slowing down at the moment.” Caterpillar raised its full-year guidance and now expects mid-to-high teens sales growth, while bracing for an estimated $2.2 billion in tariff costs for the year.
What It Means for Subcontractors
- Electrical and mechanical contractors who install and commission gensets should prepare for a wave of 10-MW gas reciprocating engine deliveries beginning Q4 2026, as Caterpillar ramps 1.5 GW of restarted capacity.
- Firms working data center buildouts can expect sustained backlog-driven work through at least 2030, since Caterpillar says 59% of its $72 billion order book ships within the next 12 months.
- Rental and equipment-support crews serving large multibillion-dollar projects should note Caterpillar’s new Major Projects joint venture, which began delivering construction equipment in the second quarter and is designed to streamline access for large contractors across North America.
- Field service companies tied to oil and gas, mining, or marine engine and turbine installs should factor in that these sectors, not just hyperscalers, are also placing large orders, per Creed’s comments on the earnings call.
- Contractors bidding fixed-price work should account for Caterpillar’s $2.2 billion tariff cost estimate for the year, which could affect equipment pricing and lead times on generator and turbine packages.
