The data center boom is breathing new life into old-line industrials as AI’s energy appetite drives a surge in generator demand.
The Machines Behind the AI Boom
The next wave of AI spending is not only lifting chipmakers and cloud platforms. It is also powering up the industrial backbone that keeps those data centers alive.
Caterpillar and Cummins, two of America’s oldest heavy-machinery names, are emerging as unlikely winners. UBS estimates both could see roughly 1.5 billion dollars each in new revenue over the next few years from backup generator sales to U.S. data centers.
It is not a total reinvention of their business, but it is a clear lift. UBS analyst Steven Fisher told clients that generator revenue for both firms may nearly double off a small base as hyperscalers race to build more capacity. The core businesses remain intact – construction machinery for Caterpillar and truck engines for Cummins – but the data center wave adds a new growth tailwind.
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Infrastructure Stocks Ride the AI Trade
Caterpillar’s stock has surged about 45 percent this year, while Cummins is up 20 percent, as investors look for exposure to AI without paying semiconductor multiples. Barclays analyst Adam Seiden believes Caterpillar could triple its annual data-center power revenue by 2030 as demand for both primary and backup generation climbs.
The setup is simple: every new AI data center needs reliable electricity, and redundancy is mandatory. Generators are the safety net. As Nvidia, Microsoft, and Amazon scale their AI operations, the demand for steady backup power is rising with them.
That demand, in turn, feeds back into the traditional economy – construction, logistics, fuel systems – and extends the AI trade into sectors that rarely see the spotlight.
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Volatility and Perspective
Despite the excitement, analysts warn against assuming a straight line upward. Generator sales still make up a small portion of total revenue for both Caterpillar and Cummins, and stocks tied to the energy-demand theme have been volatile.
Even so, Wall Street is paying attention. The UBS report frames the story not as a one-off pop but as part of a structural shift in how AI’s physical footprint ripples through the industrial economy.
The lesson is that artificial intelligence may be digital, but its growth is intensely physical. Someone has to build, power, and maintain the infrastructure that makes it real.
