Caterpillar Rally 172% With Record $51B Backlog and AI-Driven Power Growth
Caterpillar shares have surged 172% over the past year to $787, trading at 34x forward earnings of $22.89, double its five-year average. Q4 2025 Power & Energy revenues hit $9.4 billion (+23% YoY) and a record $51 billion backlog, with 62% converting within 12 months.
1. Stock Performance and Valuation
Caterpillar’s shares have rallied 172% over the past 12 months to $787, pushing its forward P/E to 34x based on expected earnings of $22.89—double its five-year average multiple and prompting questions about valuation sustainability.
2. Power & Energy Segment Re-rating
In Q4 2025 the Power & Energy segment delivered $9.4 billion in revenues, up 23% year-over-year, with segment profits of $1.84 billion at 19.6% margins, driven by a 44% surge in power generation sales for data center demand.
3. Record Backlog and AI Demand
The company exited 2025 with a record $51 billion order backlog, a 71% increase year-over-year, with 62% due to convert within 12 months; these contracted orders include four prime power installations exceeding 1 gigawatt each for hyperscalers expanding AI infrastructure.
4. Capital Allocation and Structural Tailwinds
Management has outlined a $3.5 billion capex plan for 2026—a 25% increase—to double large engine capacity and more than double industrial gas turbine capacity by 2030, supported by structural tailwinds in AI data centers and EV mining supercycles.