Caterpillar forecasts higher annual revenue as power equipment benefits from AI buildout

Heavy equipment is parked at the site of Caterpillar Belgium, in Gosselies, Belgium. (AP Photo/Yves Logghe, File)

Caterpillar raised its annual revenue forecast after beating expectations for quarterly profit, as its power equipment business benefited from an AI infrastructure boom, while higher sales to dealers helped its construction unit.

The company, seen as a bellwether for the global industrial economy, also trimmed its projection of a tariff hit to a range of US$2.2 billion to $2.4 billion for the year from $2.6 billion.

Its shares were up 5.3 per cent in pre-market trading.

Over the last year, Caterpillar’s power and energy segment has seen brisk sales as electricity-hungry data centers spend heavily on power generation and backup equipment to extend AI’s reach.

Analysts had said in a pre-earnings note that the company’s earnings stood to benefit from dealers building fresh inventory of construction equipment as well as strong execution of pending AI orders.

The company estimated its full-year revenue would rise in the low double-digit percentage range, compared with about seven per cent compounded annual revenue growth it previously projected.

Its first-quarter adjusted profit per share rose to $5.54 in the January-March period, compared with $4.25 a year earlier, beating analysts’ expectation of $4.62 per share, according to data compiled by LSEG.

Revenue grew 22 per cent to $17.42 billion, above expectations of $16.61 billion.

Revenue from its core construction segment jumped 38 per cent, while the power and energy segment revenue was up 22 per cent. Both segments were helped by strong demand from customers in North America, Caterpillar’s biggest market.

Caterpillar said benefits from higher sales volume and better pricing were partly offset by unfavorable manufacturing costs of $710 million, largely tied to higher tariffs.

Industrial firms in the U.S. were among the hardest-hit companies by Trump’s U.S. tariffs, which raised costs of imported raw materials and production machinery, while the broader economy took a hit from delayed business activity and sluggish corporate spending.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Anil D’Silva)