Caterpillar’s Data Center Pivot May Be Its Smartest Move Yet: The Most Underrated AI Infrastructure Stock?

Caterpillar, long known for bulldozers and mining trucks, is now emerging as a quiet force behind the AI revolution—not through chips or software, but by powering the infrastructure that supports it. At the heart of this shift is Caterpillar’s large-engine manufacturing facility in Lafayette, Indiana, where engines ranging from 1,000 to 6,000 horsepower are built to meet the soaring electricity demands of AI-powered data centers. The facility, which currently employs over 2,000 people, is expected to double its capacity over the next three years. These engines feed into Caterpillar’s Energy & Transportation segment, which generated $28 billion in sales in 2024—44% of its machinery-related revenue. With global electricity demand forecasted to rise 25% over the next decade and the average data center drawing over 125 megawatts of power, Caterpillar finds itself in a unique position. Analysts are taking note, with some forecasting double-digit EPS growth by 2029, even as near-term headwinds remain from slowing construction and mining demand.