Companies that produce inconspicuous but critical equipment, such as Caterpillar, Cummins, Generac, and Rolls-Royce, are becoming the main beneficiaries of the data center construction boom.
Companies that produce inconspicuous but critical equipment, such as Caterpillar, Cummins, Generac, and Rolls-Royce, are becoming the main beneficiaries of the data center construction boom.
According to Business Insider, Caterpillar and Cummins shares have risen even more than many of their major Big Tech customers, including Amazon, Meta, and Microsoft, over the course of the year.
Cummins' sales of data center power equipment last year amounted to $2.6 billion. The company expects this figure to grow by 30–35% this year.
At Caterpillar, the power segment’s share of total Cat sales has grown from 8.4% in 2021 to more than 14% in the first nine months of this year. Caterpillar is investing $725 million in an expansion of its Indiana plant, which will more than double engine production by 2027.
Rolls-Royce's power systems division reported record revenue, partly thanks to a 46% year-on-year increase in data center sales.
According to Cummins CEO Tom Shepherd, the power generation business has “never seen this scale.”
Global competition for energy is so intense that utilities are struggling to bring data centers online, leading to a surge in demand for natural gas-fired generators that can operate 24/7 for months or even years.
Over the past year, the share of analysts recommending buying Cat shares has increased from 41% to 54%.
Earlier forecasts from the Amsterdam School of Business and Economics indicated that the needs of the artificial intelligence industry by 2027 will consume as much energy as countries the size of Sweden or Argentina.
