Caterpillar Logs Record Sales Quarter on Data Center Demand

Caterpillar just posted the highest sales quarter in its history, and data centers are the reason why. The heavy machinery maker's backlog has swelled to $78 billion — nearly double what it was a year ago — as orders for power generation equipment keep climbing.

"Our third quarter results reflect the durability of our end markets, with our highest sales quarter ever, strong order rates and a record backlog," CEO Joseph Creed said on the Q3 earnings call Thursday morning. He added that the company has expanded production of large reciprocating engines and turbines, and increased capacity, to meet surging demand from data center customers.

"The team is effectively managing the operational challenges that come with this rapid growth," Creed said.

Which division drove the record?

Power and energy led the way. The segment, which makes gas-powered engines and generators, booked $8.8 billion in sales — up 18% from the same quarter last year, and enough to outpace every other Caterpillar division.

Power generation sales alone jumped 30% year over year, fueled by data center customers. Oil and gas sales also grew by double digits, driven by reciprocating engine aftermarket parts and engines used in gas compression. Roughly 82% of the division's external sales and revenue came from North America and the Europe-Middle East-Africa region, while Latin America and Asia-Pacific declined. Segment profit reached $2.1 billion, up 31%.

Construction industries followed close behind at nearly $8 billion in sales, also up 18%, with growth across every geographic region. North America made up more than half of external sales. Higher volumes and prices absorbed unfavorable manufacturing costs, including freight and capacity expansion. Last month, Caterpillar committed $1 billion to build a facility in Sanford, North Carolina, focused on compact construction equipment for small contractors. The segment earned $1.8 billion, up 33%.

Where did the quarter fall short?

Resource industries missed expectations. The mining-focused division posted $4.6 billion in sales, up 15%, but Creed attributed the shortfall to mining shipment and commissioning delays plus lower locomotive deliveries. Retail sales to end users grew just 4% — a telling figure, since most of Caterpillar's revenue flows through dealers and original equipment manufacturers rather than end users directly. Segment profit was $622 million, up 14%, as higher volumes and prices offset manufacturing, material and tariff costs.

What about tariffs?

Caterpillar recognized $600 million in tariff costs during the quarter, excluding International Emergency Economic Powers Act refunds it claimed. That matches last year but sits $200 million below what the company recorded in Q4 2025, CFO Kyle Epley said. Construction industries carry about half of that tariff load, with power and energy and resource industries each accounting for 25%.

For the full year, Caterpillar expects tariff costs of roughly $2.2 billion, excluding IEEPA refunds, Epley said.

What comes next?

The company guided to "moderate sales growth" in Q4 over last year, with higher operating profit margins, and forecast "mid-to-high teens growth" for the full year versus 2025.

"We delivered another very strong quarter, with year-to-date financial results tracking toward another record year for Caterpillar," Epley said. "Our end markets remain healthy with strong order rates and a growing backlog."

If data center construction keeps its current pace, that $78 billion backlog suggests Caterpillar's record run isn't finished yet.