Caterpillar beats estimates as AI boom drives energy equipment demand

Heavy equipment is parked. (AP Photo/Yves Logghe, File)

Caterpillar topped third-quarter profit and revenue estimates on Wednesday as a boom in AI technologies drove demand for its energy equipment, sending its shares up about four per cent before the bell.

The industrial equipment maker’s energy and transportation unit has fueled much of the company’s growth in recent quarters as AI-driven investments in power-hungry data centers have boosted demand for its power-generation systems.

U.S. President Donald Trump’s focus on energy projects has further aided the segment.

The unit, which also makes mining equipment such as excavators and giant shovels, contributes 40 per cent to Caterpillar’s overall revenue.

The company’s energy and transportation unit posted a 17 per cent rise in third-quarter sales to about US$7.2 billion.

Industrial machinery makers, such as Caterpillar, are now grappling with higher costs from Trump’s expansive tariffs on imports, while weak demand and elevated interest rates limit their ability to pass on the burden to customers.

The company now expects its annual tariff costs between $1.6 billion and $1.75 billion, compared with its prior expectation of $1.5 billion to $1.8 billion.

During the second quarter, companies across the globe flagged a combined annual financial hit between $16.2 billion and $17.9 billion and nearly $15 billion for 2026, according to a Reuters tariff tracker.

The company, seen as a bellwether for the global industrial economy, reported quarterly revenue of $17.6 billion, beating Wall Street’s expectation of $16.77 billion, according to data compiled by LSEG.

Its mainstay construction segment posted a 7% rise in revenue to $6.76 billion, helped by price hikes.

The company reported a quarterly adjusted per share profit of $4.95, topping the average estimate of $4.52.

(Reporting by Nandan Mandayam and Nathan Gomes in Bengaluru; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty)