Caterpillar Is Quietly Becoming an AI Stock. Here's the Segment Growing 72% That Proves It.

When most people think of Caterpillar (NYSE: CAT), they think of the iconic yellow tractors, harvesters, and other farm equipment that have powered American agriculture for over a century. And of course, the company is also known for its construction equipment, including backhoes, bulldozers, and excavators (also yellow), among many other types of heavy equipment.

But recently, a new narrative has emerged about Caterpillar: It's an artificial intelligence (AI) stock, and one that investors optimistic about the AI revolution should absolutely consider, as a way to diversify away from core AI stocks like Nvidia, Alphabet, and Micron Technology, but still benefit from the massive AI infrastructure build-out now taking place.

How do I know this? Well, just look at the company's most recent quarterly results.

In the second quarter, Caterpillar's total revenue grew an impressive 24% over the same quarter in 2025. And earnings per share soared 73% from a year ago.

Power equipment sales are driving revenue growth

But you only need to dig a little deeper to uncover which segment is really exploding at the company: power generation. Total retail sales for the power and energy segment rose 33% in the quarter. And what drove that? Retail sales of power generation equipment, which climbed an incredible 72%.

In the earnings call after the Q2 results were released on Aug. 4, CEO Joseph Creed said the increase was due to "very strong demand for large gen[erator] sets and turbines used in data center applications."

AI data centers have a nearly insatiable thirst for power, so sales of power-supplying equipment are going gangbusters. In 2025, data centers consumed about 4.9% of the U.S. electricity supply. In some states, that was more than 10%; in data center-heavy Virginia, it's more than one-quarter. Electricity consumption by U.S. data centers is projected to more than double by 2030. And from there, who knows?

Better still, customers for Caterpillar's power and energy equipment are now placing orders through 2030. As a result, the company's backlog, now at a record $72 billion, has expanded 92% over the past year.

So, a large portion of Caterpillar's revenue growth right now is driven by data center construction and power needs. And that looks to increase in the coming months and years. Caterpillar calls its power and energy its "Largest and Fastest Growing Segment."

Image source: Getty Images.

Caterpillar will report its third-quarter earnings on Oct. 29. Wall Street expects revenue growth of 17% over the same quarter last year and earnings of $7.03 per share, up 42% from a year ago. I wouldn't be surprised if the company beats those estimates.

For investors who believe, as I do, that the AI spending juggernaut will continue for years to come, investing in Caterpillar is a good way to profit from it while diversifying a bit from the core AI stocks.

Matthew Benjamin has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Caterpillar, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.