Caterpillar sticks to sales forecast as shares dive on AI boom doubts
Caterpillar maintained its annual sales growth forecast on Thursday despite strong data-centre demand, as cost pressures and investor scepticism over the AI boom weighed on the stock. Shares fell 8 per cent in what was set to be the company's biggest single-day drop since April, after it flagged gro
Caterpillar stuck to its annual sales growth forecast on Thursday despite strong demand for its power equipment from data centres, amid cost pressures and growing investor scepticism over the artificial-intelligence boom. Shares of the company sank 8 per cent, putting them on track for the biggest single-day drop since last April. The stock was the second-biggest laggard on the Dow Jones Industrial Average, which was down 0.24 per cent.
The company, best known for its yellow bulldozers, has benefited from the expansion of power-hungry data centres across the US, which boosted demand for its construction equipment and generators. However, growing opposition to data centres and calls to slow AI development have weakened investor sentiment.
On a post-earnings call with analysts, Caterpillar executives reassured investors about demand for backup power systems, but said bringing additional capacity online remained a drag on growth. The company said it was boosting engines and turbine production, but added that the time required to build up manufacturing capacity was limiting how quickly it could meet growing demand.
Caterpillar expects its 2026 revenue to grow in the mid- to high-teens percentage, while analysts expected growth in the high teens range, or roughly 18 per cent. Chief executive Joe Creed said the company has “a line of sight (on demand) past the backlog”, stretching up to 2030, and beyond that in some cases. Its quarterly order backlog swelled to a record $78.1 billion, up $6 billion from the prior quarter. But the increase was smaller than previous periods, and according to J.P. Morgan, was likely below bullish expectations of $80 billion.
Oppenheimer analyst Kristen Owen said the quality of the company's earnings beat gave investors “a chink in the CAT armour” despite broad-based growth. Caterpillar expects its current-quarter revenue growth to moderate from last year's 18 per cent level, as tariffs and record diesel prices raise freight costs. It also kept the annual tariff cost forecast of around $2.2 billion unchanged.
On an adjusted basis, its third-quarter profit per share rose to $7.20, compared with analysts' expectation of $7.08, according to data compiled by LSEG. Over the last four quarters, the company has topped Wall Street's earnings expectations by at least 40 cents, and last quarter it beat profit estimates by nearly $2 per share.