Caterpillar and Cummins Bet Big on AI's Power Hunger

Two of America's oldest industrial names are finding their biggest growth opportunity not in construction sites or highways, but inside AI data centers. Caterpillar and Cummins, traditionally tied to heavy equipment and trucking, are now racing to supply the backup and prime power generators that keep data centers running around the clock. It's a reminder that the AI trade isn't confined to chipmakers -- it's rippling through old-economy manufacturers with the capacity to retool fast.

The numbers show how serious the pivot has become. Caterpillar is investing $725 million to expand generator production at an Indiana plant, converting a Kansas facility to build turbine engines favored by data center operators, and restarting production of 10-megawatt generators it hadn't made since 2022. CEO Joe Creed said of data center customers, "If we can get more units out, they're asking us to give them more." Electricity generation has become Caterpillar's single most profitable segment. Cummins, meanwhile, is spending $450 million to expand generator capacity, on top of a $200 million expansion finished just last year, and expects data-center-related sales to climb 80% to $9 billion by 2030 -- a specific, trackable target. Ford was also named among manufacturers chasing AI-adjacent demand, though with fewer disclosed figures. Hedge funds have taken notice: Caterpillar was held by 87 funds as of Q1 2026, up from 86, while Cummins jumped to 79 funds from 67.

For investors, this is a way to get AI exposure without paying chip-stock multiples. Caterpillar and Cummins trade on industrial valuations, not AI hype premiums, yet both are now directly levered to data center capital spending. The risk is real, too: both companies are more concentrated in a single fast-moving end market than they've ever been, and any slowdown in data center construction would hit the same generator segment now driving their profit growth. Track Cummins' 80%-by-2030 sales target and Caterpillar's generator order backlog in upcoming quarterly reports -- those numbers will tell you whether this diversification is durable or just riding the current AI wave.