Caterpillar Inc. reports that the ongoing artificial intelligence boom is driving demand for its engines and generators, while robust construction spending is also boosting sales of its dump trucks, bulldozers, and excavators. These trends propelled the company's total quarterly sales and revenue up by 24%, reaching $20.54 billion.
During an analyst call, CEO Joe Creed stated that this marks the first time in the company's history that quarterly sales and revenue have exceeded $20 billion. Based on this stronger-than-expected quarter, the company has raised its full-year sales outlook. Lower-than-anticipated tariff costs for the quarter, along with a significant tariff-related tax refund, helped expand margins and improve profitability. Shortly after the market opened on Tuesday, the stock rose 10% to $913.47. The stock is up approximately 50% year-to-date.
Caterpillar's electric power and energy segment sales increased by 17% to $8.24 billion in the latest quarter. Creed explained to analysts that the growing energy demand from data centers related to cloud computing and generative AI is expected to sustain this growth through the remainder of the year. The equipment manufacturer stated it will double down on its capacity expansion plans, citing the healthy demand trends seen so far this year. "We expect to increase capacity in the second half of the year," Creed said. Reports indicate that Caterpillar previously announced a $725 million investment in its Lafayette, Indiana facility to produce more piston-driven engines for generators, its largest factory investment in about 15 years. Additionally, the company plans to more than double its turbine engine capacity by 2030.
Meanwhile, construction spending remains at healthy levels, supported by ongoing investments in critical infrastructure, heavy construction, and data centers. Caterpillar's construction industries segment sales rose 35% to $8.35 billion, while its resource industries segment sales reached $4.65 billion, a 20% year-over-year increase. The company now expects full-year sales and revenue growth to be in the mid-to-high double-digit range, compared to its previous forecast of low double-digit growth.
Alongside this new outlook, Caterpillar reported second-quarter profit of $3.59 billion, or $7.77 per share, compared to $2.18 billion, or $4.62 per share, in the same period last year. Adjusted earnings per share were $8.17, surpassing the analyst consensus of $6.22 from a FactSet survey. Chief Financial Officer Kyle Epley noted that the company's recent results benefited from a $392 million tariff-related tax refund. Tariff-related costs were approximately $400 million, significantly below the company's earlier expectation of $700 million. Looking ahead, Caterpillar expects third-quarter tariff costs to be around $600 million—roughly the same as last year—and anticipates that full-year tariff-related costs will fall within the lower end of its full-year guidance. "We are continuously monitoring the environment because, based on what we see, geopolitical conditions remain complex and volatile," Epley said. The company experienced some weakness in the Middle East during the recent quarter, impacting its EMEA segment results. However, the company expects sustained demand, along with higher sales volumes and prices, to adequately offset this weakness.
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