Caterpillar Is Doubling Capacity: Here's What To Watch

While Caterpillar Inc.'s (NYSE:CAT) power portfolio is in the "sweet spot" for on-site power for data centers, the company stands out as a "clear market leader" in terms of air permits, although there are some factors to consider, according to BofA Securities.

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The Caterpillar Analyst: Analyst Michael Feniger reiterated a Buy rating and price target of $650.

The Caterpillar Thesis: Feniger said in the note that an air permit data analysis shows that:

• Caterpillar is the clear leader for backup power
• Diesel is still the primary source, versus natural gas
• Data centers are using turbines and reciprocating

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While utility capex continues to be raised, data center build out continues to outpace power infrastructure, suggesting that the “bridge-to-grid” solutions offered by Caterpillar will remain in high demand 2026-2027, he added.

Caterpillar is more than doubling capacity, ramping to 50GW by 2030, which makes it important for the company to enter markets beyond data centers, Feniger said. "BofA sees more risk (down the road) on back up vs. prime," he further wrote.  

CAT Price Action: Shares of Caterpillar had risen by 2.65% to $583.13 at the time of publication on Tuesday.

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