Meet the trucks-and-bulldozers companies getting rich from the AI boom

• The companies making money off the AI boom aren't the ones you might expect.
• Caterpillar, Cummins, and others have made billions of dollars selling generators to data centers.
• Some analysts have raised concerns about investors overpaying, while the companies foresee years of demand.

For the last century, Caterpillar's calling card has been its trademark macaroni-yellow backhoes and bulldozers. Increasingly, customers are interested in something else: the generators powering the artificial intelligence boom.

At hundreds of data center construction sites across the US, Caterpillar — alongside Cummins, Generac, and Rolls-Royce — supplies dozens of these machines. With some capable of powering more than 1,000 homes, generators ensure that AI models and cloud software can run without interruption.

These hulking devices, it turns out, are cash cows. While the surge in AI demand has fueled hundreds of billions of dollars in spending, much of that hasn't yet flowed to the usual suspects in Big Tech. Instead, it has ended up in the hands of builders, blue-collar laborers, and companies like Caterpillar and Cummins, which manufacture unsexy but crucial equipment.

Both companies have beaten the S&P 500 over the past year — and their stock prices have spiked even more than that of many major data-center customers, including Amazon, Meta, and Microsoft. Like the California Gold Rush's picks-and-shovels purveyors before them, industrial vendors are cashing in on the AI boom.

Plenty of non-tech companies have benefited from AI spending, including companies like Primoris and Dycom Industries that lay pipes and fiber that connect data centers to natural gas and the internet. Generator companies are particularly well-positioned: As hyperscalers race to build power-hungry data centers, the demand for backup and off-grid electricity has ballooned.

"Power generation is a business that has never seen this kind of scale, in any way, ever," Tom Shepherd, a data center executive at Cummins, told Business Insider.

Data centers are a bright spot for industrial businesses

About a decade ago, Shepherd oversaw a $50 million-a-year regional power-generation business in Oklahoma that largely sold Cummins systems to customers like hospitals and wastewater plants. He recalled just one large data center in his territory, run by Google.

"There just wasn't the scale," he said.

Today, Google's parent company, Alphabet, has more than two dozen data centers online or in development across the US. It has revised its planned capex spending for 2025 upwards every quarter, and now estimates that it will spend at least $91 billion by the end of the year. That's a fraction of the $7 trillion that will be spent on data centers globally by 2030, per McKinsey.

For manufacturing-oriented industrial businesses that have faced threats from tariffs, rising expenses, and persistently high interest rates, data center demand is a welcome bright spot. Business Insider previously used diesel generator air permits to estimate data center growth and found that if all permitted data centers went online, their electricity use could be as much as the entire state of Florida.

Sales of Cummins' signature truck engines have slipped over the past year, but the company sold $2.6 billion of power-generation equipment to the data-center industry last year and expects that number to grow by 30 to 35% this year, CEO Jennifer Rumsey said on a conference call last month.

The power-generation segment of Caterpillar — often shortened to Cat — grew from 8.4% of its total sales in 2021 to more than 14% of its sales in the first nine months of this year. And Rolls-Royce's power-systems unit reported record revenue in February, driven partly by 46% annual growth in data-center sales.

Their stock prices have also soared. Both hit all-time highs this week; Cat closed above $590 a share on Wednesday, topping the previous high set after beating earnings in October, and Cummins shares crossed $507 on Wednesday.

Analysts are generally bullish. According to information tracked by the companies, over the past year, the percentage of analysts who think investors should buy Cat's stock has grown from 41% to 54%; for Cummins, the share has gone from one-third to half.

Some analysts have sounded alarms, but the companies aren't worried

Some indicators suggest the market took the picks-and-shovels trade too far. In October, Morgan Stanley estimated that Cat's power-generation arm was valued by investors at 60-to-100 times its operating income. At Nvidia, the same multiple was 25 times; at GE Verova, another electrical-equipment business, the multiple was 28 times.

Melissa Busen, who runs the electrical power division at Cat, says she's not worried. The company's $39.8 billion order backlog is almost triple what it was five years ago, and Busen said the largest customers are making plans for years down the road.

If one of them has hardships, she said, another will take its place. She noted that Cat has been supplying the data-center industry since the early 1990s and has "been able to build true partnerships" with the new crop of hyperscalers.

Cat broke ground last year on a $725 million expansion of its engine factory in Lafayette, Indiana, where it currently employs 1,900 people. The expansion will more than double the company's output of the engines that data-center developers are demanding, and is set to come online in 2027. Expansions are also underway at Rolls-Royce plants that build data-center generator parts in South Carolina and Minnesota.

Data center construction in Asia and Europe is also a component of demand, and many generators are manufactured outside the US. Cummins said earlier this year that it planned to invest $200 million across its power-generation manufacturing sites in India, England, and the US. The company plans to double the production capacity of the giant, 95-liter engines that drive data-center generators.

The money isn't just in backup generators that sit idle most of the time, either. In the race for power, utilities aren't able to connect companies to the electric grid fast enough. Increasingly, Cat and Cummins have been called on by Microsoft, Amazon, hyperscalers like Coreweave, and regional players like Joule for natural gas-burning generators and turbines that can run 24/7 for months or even years.

Cat's Busen said customers don't just want to talk about engines and turbines — they want to talk about "a complete, integrated solution" to their electrical needs, including things like batteries, inverters, and control systems.

The biggest limiting factor for now, said Shepherd, is "the physical ability of our society to build this kind of infrastructure."

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