Stocks of both Caterpillar and Cummins have risen significantly due to the expansion of data centers across the U.S., as investors looking to profit from the AI wave are now buying shares in older manufacturing companies that supply the machinery needed to support the technology.
Heavy machinery companies Caterpillar Inc. and Cummins Inc. are expected to see a strong boost in profits over the next three years as the demand for backup generators grows due to the rapid expansion of data centers in the United States.
Data centers increase the demand for heavy machinery makers
UBS analyst Steven Fisher said in a note to clients that revenue from selling backup generators to data centers could nearly double for both companies, potentially adding about $1.5 billion in revenue each.
“Our base case suggests revenues from generator sales for US data centers could come close to doubling,” Fisher wrote. “However, it is off of a relatively small base for each.”
UBS expects the companies’ core businesses, which are construction machinery for Caterpillar and truck engines for Cummins, to continue being the main drivers of earnings. The firm also noted that the ongoing construction of data centers could indirectly benefit Caterpillar and Cummins’ core construction divisions, given the machinery and equipment needed to build and maintain large-scale facilities.
Volatility remains despite AI perks
The recent demand for AI-related infrastructure has already had a major impact on the stock market. Caterpillar shares have surged 45% in 2025, while Cummins is up 20%.
“Hungry for exposure to a boom in artificial intelligence, investors have piled into shares of old-line industrial companies that make equipment used to generate power for data centers,” Fisher noted.
In a separate analysis published Tuesday, Barclays analyst Adam Seiden predicted that Caterpillar could triple its annual data center power revenue by 2030, driven mostly by demand for primary electricity generation.
As companies such as Nvidia, Microsoft, and Amazon scale up their AI infrastructure, the need for both reliable backup power and sustainable energy sources is growing.
However, analysts warn that investor optimism may be outpacing reality. Stocks tied to energy demand, including Caterpillar and nuclear reactor firm Oklo Inc., have been volatile in recent sessions.
The UBS report also cautioned that while the generator sales seem positive, it still only represent a relatively small portion of total revenue for both companies.
Still, as investors remain excited over artificial intelligence technology, the biggest beneficiaries may be the industrial manufacturers building the hardware that keeps data centers running.
The period of this optimism depends on how quickly power demand grows and how energy infrastructure evolves to support it.
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