Publication date:
July 11, 2025
Caterpillar's Energy and Transportation Segment Outpaces Construction, Driven by Data Center Demand
Caterpillar's growth is now led by powering data centers, with the energy and transportation segment outperforming construction for the first time.
Energy
Caterpillar, the industrial equipment giant, is experiencing a significant shift in its business dynamics as its energy and transportation segment overtakes the traditional construction industries segment. In 2024, energy and transportation accounted for $28.9 billion in annual revenues, compared to $25.5 billion for construction.
Jason Kaiser, Caterpillar's group president for energy and transportation, attributes this growth primarily to surging energy demand, particularly in power generation for data centers. The company has been strategically investing to capitalize on this trend, which began to consistently outpace construction in the fourth quarter of 2023.
The rise in data center demand, partly fueled by the AI revolution, is driving Caterpillar's growth projections. The company anticipates U.S. electricity demand to increase by 25% from 2023 to 2035, and by 60% from 2023 to 2050. Global demand is also on an upward trajectory.
To meet this growing demand, Caterpillar is ramping up its manufacturing capacity, especially for gas-fired turbines at its California facilities. The company's engine manufacturing capacity for data centers is set to increase by 125% from 2023 levels.
Caterpillar is providing comprehensive solutions for data centers, including turbines for on-site primary power, generator sets for backup power, and microgrids that can integrate fossil-fuel-based power with renewable sources like solar and battery storage. The company's 38-megawatt gas-fired turbines are particularly popular for the ongoing AI-driven construction boom.
To address supply chain challenges and long queues for gas-fired turbines, Caterpillar is working closely with its hyperscaler clients on long-term planning. This collaboration enables the company to have multi-year visibility into demand, facilitating confident investments in capacity expansion.
Beyond data centers, Caterpillar's energy and transportation segment also serves the oil and gas industry, which is increasingly demanding equipment for more electric power and reduced emissions. The company provides solutions across the value stream, from drilling wells to electricity generation.
As Caterpillar celebrates its centennial anniversary, this pivot towards energy and data center solutions marks a significant evolution in the company's business model, positioning it at the forefront of the global energy transition and digital infrastructure boom.
Jason Kaiser, Caterpillar's group president for energy and transportation, attributes this growth primarily to surging energy demand, particularly in power generation for data centers. The company has been strategically investing to capitalize on this trend, which began to consistently outpace construction in the fourth quarter of 2023.
The rise in data center demand, partly fueled by the AI revolution, is driving Caterpillar's growth projections. The company anticipates U.S. electricity demand to increase by 25% from 2023 to 2035, and by 60% from 2023 to 2050. Global demand is also on an upward trajectory.
To meet this growing demand, Caterpillar is ramping up its manufacturing capacity, especially for gas-fired turbines at its California facilities. The company's engine manufacturing capacity for data centers is set to increase by 125% from 2023 levels.
Caterpillar is providing comprehensive solutions for data centers, including turbines for on-site primary power, generator sets for backup power, and microgrids that can integrate fossil-fuel-based power with renewable sources like solar and battery storage. The company's 38-megawatt gas-fired turbines are particularly popular for the ongoing AI-driven construction boom.
To address supply chain challenges and long queues for gas-fired turbines, Caterpillar is working closely with its hyperscaler clients on long-term planning. This collaboration enables the company to have multi-year visibility into demand, facilitating confident investments in capacity expansion.
Beyond data centers, Caterpillar's energy and transportation segment also serves the oil and gas industry, which is increasingly demanding equipment for more electric power and reduced emissions. The company provides solutions across the value stream, from drilling wells to electricity generation.
As Caterpillar celebrates its centennial anniversary, this pivot towards energy and data center solutions marks a significant evolution in the company's business model, positioning it at the forefront of the global energy transition and digital infrastructure boom.
