Caterpillar’s (Ticker: CAT) backlog surged to a record $51bn (+71% YoY), across all three divisions, signaling broad-based strength and multi-year demand visibility extending into 2027.
Power generation was the clear standout, fueled by data center construction and energy infrastructure, with sales topping $10 billion in 2025.
The results point to an industrial cycle across data center power, reshoring-driven factory construction, and global resource demand that appears to have years left to run.
More telling than headline revenue growth (+18% in Q4) and the earnings beat (11% against consensus) is the $51 billion backlog, a 71% increase from a year agoi. Impressively, the backlog grew across all three divisions—a sign that Caterpillar is firing on all cylinders, a breadth of strength not seen in years. Management indicated that roughly 62% of that backlog is expected to convert within the next twelve months, well below normal levels, with visibility now extending into 2027 and beyondii.
This record backlog reflects a fundamental reshaping of industrial demand. Three forces are converging:
The buildout of AI-driven data centers requiring massive power infrastructure
Government-backed infrastructure programs gaining traction
A sustained push to relocate manufacturing capacity back to American soil
The Power & Energy segment was Caterpillar's fastest-growing business in 2025 and a key focus of the company. Power generation sales, a subsegment of the division, alone exceeded $10 billion, up more than 30% from the prior yearii. This represents clear progress toward the company’s objective of doubling power generation sales by 2030iii. The fourth quarter saw acceleration, with power generation revenues up 44%i.
The explosive growth of AI workloads requires enormous—and reliable—electrical capacity. Caterpillar's large reciprocating engines, gas turbines, and integrated power systems are increasingly essential to hyperscale operators who cannot afford downtime. Management highlighted a recent 2-gigawatt reciprocating generator prime power order—evidence of the scale and maturity of deals now being signediv. Notably, this order is not yet reflected in the record backlog.
This is the less visible infrastructure layer of the AI boom. While semiconductors capture the headlines, someone has to build and power the facilities that house them.
Beyond data centers, Caterpillar is a direct beneficiary of the ongoing reshoring of American manufacturing. Every new factory, semiconductor fab, battery plant, and logistics facility requires earthmoving equipment, construction machinery, and power infrastructure—categories where Caterpillar is often the supplier of choice.
"We expect North America to continue to be strong. Obviously, the data center build-out is not just good for power and energy. That drives a lot of construction activity as well. There are a number of other construction projects moving along. And as we said in our prepared remarks, we continue to see that strength here in North America. IIJA spending still continuing to go on."
Caterpillar CEO Joe Creedii
Government programs like the Infrastructure Investment and Jobs Act (IIJA) and the CHIPS Act have created multi-year demand visibility. Meanwhile, companies across industries are rethinking global supply chains in favor of domestic production, a shift that shows no signs of reversing.
Caterpillar’s results offer a window into an industrial cycle that appears to have years left to run. The convergence of AI infrastructure buildout, federal spending programs, and supply chain reshoring is creating durable demand for the companies that actually build things—and the equipment makers that supply them.
For investors seeking exposure to this theme, Tema American Reshoring ETF (RSHO) invests in companies positioned to benefit from a potential resurgence in US manufacturing, industrial activity, and infrastructure development. Caterpillar is among the holdings in the portfolio.
For more of our research and recent insights on US reshoring and more, view and subscribe to our insights.