Caterpillar Will Remain an Important AI Stock for a Long Time

The emergence of Caterpillar (NYSE: CAT) as an AI stock caught many investors by surprise. Although Caterpillar doesn't produce exciting chips that enable AI models, humanoid robots, or other innovations, it supplies the necessary energy components.

Caterpillar's power generators provide data centers with a backup energy source in the event of grid or utility downtime. This role has helped Caterpillar outperform the S&P 500, and it suggests that recent gains are just the beginning.

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Power generators continue to propel the company

Caterpillar delivered 22% year-over-year revenue growth in the first quarter, and the company's power and energy segment was a major reason. That part of the business also went up by 22% year over year and represents more than one-third of total sales.

Caterpillar's construction segment also did well as more companies build data centers. The company's equipment is vital for site construction, giving Caterpillar even more exposure to the AI boom.

The International Energy Agency projects data center electricity consumption to increase by 15% per year through 2030. That's more than four times the growth rate of total electricity consumption from all other sectors.

The heightened demand for electricity will simultaneously help Caterpillar's power generators gain market share. Deloitte offers even more ambitious targets, suggesting that power demand from AI data centers in the U.S. can grow more than 30-fold by 2035.

These long-term targets imply that AI expansion will continue for multiple years or decades. Energy is required to enable AI data centers, setting up a massive tailwind for Caterpillar.

Caterpillar anticipates more growth

Connecting the dots suggests Caterpillar can continue to post solid results, but executives opted to provide a clear picture after reporting Q1 results. After touting those earnings as better than expected, the company now anticipates "higher sales and revenue growth in 2026 compared to a quarter ago."

Power generators and North American customers are driving most of the growth and contributed to a $62.7 billion order backlog. That backlog represents an $11.5 billion sequential increase -- a new record for the company. It offers clear revenue visibility that will make it easier for the company to achieve double-digit revenue growth rates.

That growth also comes with a rising dividend and plenty of stock buybacks. Caterpillar returned $5.7 billion to shareholders in Q1, demonstrating it can increase capital expenditures while rewarding long-term investors.

Caterpillar even delivered rising profits, with adjusted operating profits increasing from $2.6 billion in Q1 2025 to $3.1 billion in Q1 of this year. The AI boom needs power, and Caterpillar is built to supply it for years to come.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar. The Motley Fool has a disclosure policy.