Caterpillar Sets New Growth Goals as Energy Demand Surges
Company's Power Generators and Turbines, Used for Data Centers, Have Become Caterpillar's Fastest-Growing Business
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Caterpillar Inc. laid out new growth targets to boost revenue and double capital spending in a bid to capitalize on rising demand for energy to power data centers.Ěý
The company is looking to generate $30 billion in services revenue between last year and 2030, while raising its adjusted operating profit margin to $60 billion to $100 billion in the same period, it said Nov. 4. That’s up from a previous estimate for $42 billion to $72 billion.
The new goals,ĚýdetailedĚýin presentation slides ahead of Caterpillar’s annual Investor Day on Nov. 4, are part of the century-old machinery maker’s bid to transform itself into an energy services heavyweight. Caterpillar’s power generators and turbines, used for data centers, have become the company’s fastest-growing business as demand for artificial intelligence takes off globally, marking a shift from the company’s focus on bulldozers and diggers.Ěý
The firm’s growth targets “reinforce the key theme coming out of earnings last week,” said Michael O’Rourke, chief market strategist at JonesTrading. “The company is a literal picks-and-shovels play on data center buildouts.”
Shares of Caterpillar soared last week after the firm reported a 17% jump in revenue from its energy and transportation division.Ěý
To help reach its projections, the firm unveiled plans Nov. 4 to increase capital spending and capacity across its business divisions. It plans to more than double its capacity of gas turbines, which convert fuel into energy to produce electricity, while also doubling its capacity of large engines.
The boost in turbine capacity comes amid an explosion in energy consumption from data centers. Demand for gas hit a record last year, while suppliers of turbines struggled to keep up with orders.
The company also said it’s targeting a 5% to 7% compound annual growth rate in sales and revenue from 2024 through 2030.
On Nov. 4, the firm said it will change the name of its Energy & Transportation unit to Power & Energy to focus on “historic growth” within power generation services in the coming years. Its transportation services will be moved to the company’s Resource Industries segment.Ěý
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