Caterpillar's Power Generation Backlog Just Hit $72 Billion. The Construction Cycle Barely Matters Anymore.

CAT +1.72% NVDA +0.84% Caterpillar (NYSE: CAT) posted eye-popping numbers in the second quarter of 2026 as its backlog grew 92% year over year to more than $72 billion. The narrative behind the backlog is just as important as the number itself, as the AI boom and data centers in particular drove the astonishing growth.

Strong demand for large generator sets and turbines grew 72%. Caterpillar's biggest challenge now is not the immense demand; it's the company's capacity to meet it. This is what's actually limiting growth as Caterpillar does its best to keep up with orders.

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The AI-related boom has largely broken away from the traditional construction cycle, as many of Caterpillar's Power & Energy customers are ordering equipment through 2030. Approximately 59% of the $72 billion backlog is expected to be delivered in the next year. Still, the Power & Energy segment's portion extends much further out than is considered normal for the construction equipment industry.

The company is responding to demand by planning to restart production of its 10-megawatt gas engine platform, bringing about 1.5 gigawatts of capacity back online as production ramps up, with shipments starting before the end of the year.

Caterpillar has long been a bellwether for the construction industry at large. Yet, the company has now decoupled from the construction cycle, and its future is more closely tied to power grids than to housing starts. The construction cycle, as we know it, has evolved. The company's stock has risen more than 90% in the past 12 months and is trading around $815 per share as of this writing.

I'm bullish on Caterpillar, as its revenue visibility over the next half-decade is impressive.

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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar. The Motley Fool has a disclosure policy.

Caterpillar's Power Generation Backlog Just Hit $72 Billion. The Construction Cycle Barely Matters Anymore. was originally published by The Motley Fool