New York, Jan 29, 2026, 13:57 ET — Regular session
- CAT shares climbed roughly 3% following a quarterly report that topped revenue and adjusted profit estimates
- The company warns that tariff-related costs might reach around $2.6 billion in 2026, with most of the impact hitting in Q1.
- Growth in Power and Energy, driven by data centers, boosted backlog to $51 billion
Caterpillar Inc shares climbed roughly 3% to $662.81 in midday New York trading Thursday, buoyed by stronger-than-expected profits and robust power demand from data centers. The stock briefly surged to an intraday peak of $686 before pulling back.
The report arrives at a tricky point for industrial stocks. While investors use Caterpillar as a gauge for construction and mining demand, the bigger question is if AI-driven spending can sustain parts of the order book amid rising costs in other areas.
Caterpillar flagged tariff-related expenses could hit around $2.6 billion in 2026, with about $800 million expected in the first quarter alone. The company said this would push its annual adjusted operating profit margin toward the lower end of its target range. Tariffs, essentially import taxes, have been identified by Caterpillar as a direct drag on manufacturing costs. (Investing.com Australia)
The Irving, Texas-based company posted fourth-quarter 2025 sales of $19.1 billion, marking an 18% increase from the previous year, alongside an adjusted profit of $5.16 per share. CEO Joe Creed described the year as a centennial milestone, achieving “the highest full-year sales and revenues” in Caterpillar’s history. (Caterpillar)
Profitability painted a rougher picture. Operating profit dropped 9% for the quarter, with the company blaming tariff-related manufacturing costs as a major drag. Analysts had anticipated $4.68 per share and $17.86 billion in revenue, according to LSEG data. Jefferies analyst Stephen Volkmann noted that tariff headwinds “limited the margin expansion for the quarter.” (Reuters)
Power showed the sharpest demand, Creed noted, with orders climbing for “prime power” systems — big generators built to operate nonstop — as data centers increasingly install on-site electricity. Sales in Power and Energy jumped 23% to $9.4 billion, pushing the year-end backlog, or unfilled orders, up to $51 billion. (The Motley Fool)
The push for data centers is driving new orders. AIP Corp has placed an order for 2 gigawatts of fast-response natural gas generator sets for its Monarch Compute Campus. Deliveries are set from September 2026 through August 2027, with battery energy storage planned alongside the build. “This strategic alliance reflects a shared commitment to delivering reliable, scalable, and capital-efficient power solutions,” said AIP CEO Daniel J. Shapiro. (Caterpillar)
Caterpillar’s challenge lies in those tariff line items—easy to overlook when demand is robust but painful if pricing power weakens. If data-center spending dips or customers hold off on major equipment purchases, margins tighten quickly.
Investors are now focused on the March quarter: will tariff costs begin to drop as the year goes on? And can new power orders continue flowing in at the rate suggested by the backlog?
