Caterpillar's Power Generation Business Is Nearly as Big as Its Construction Segment. Here's What That Shift Means for the Stock's Multiple

Caterpillar's power generation division now rivals its construction segment in size, posting $8.2 billion in revenue and $2 billion in operating profit last quarter—figures that exceeded the construction unit's metrics. The shift is driven by AI data center demand for generators and turbines, transforming CAT's business mix and investor perception.

The company's power and energy backlog hit $72 billion, surging 92% year-over-year. That pipeline positions CAT as an AI infrastructure play rather than a pure cyclical industrial, pushing its forward P/E above 30. The Motley Fool reports analysts still see upside potential despite the elevated multiple, suggesting the market hasn't fully priced in the energy transition catalyst.

CAT is capturing data center build-out spending as hyperscalers race to power AI compute clusters. The 92% backlog growth signals multi-year revenue visibility in a segment with structurally higher margins than traditional construction equipment.