AI data center boom pushes Caterpillar, Ford, and other US firms into new businesses
Caterpillar is the world's largest construction equipment manufacturer, ahead of rivals Komatsu, Volvo CE, Hitachi, and JCB. However, its engine and turbine sales surpassed its construction equipment revenue for the first time last year, as AI data centers turn to jet engines and diesel generators for power. Read Entire Article
Several prominent US automotive and heavy equipment manufacturers, including Caterpillar, Cummins, Eaton, and Ford, are increasingly diversifying their business models to capitalize on the surge in demand for power equipment in AI data centers. Caterpillar, the world's largest construction equipment manufacturer, saw its engine and turbine sales surpass its construction equipment revenue for the first time last year as data centers increasingly rely on jet engines and diesel generators for power.
In response, Caterpillar modernized and invested in its Lafayette, Indiana factory, expecting to create 100 new jobs. The company secured contracts to supply generators to a proposed 2,250-acre Microsoft data center in West Virginia, which could become one of the world's largest dedicated AI compute installations by 2031. Cummins is also benefiting from the AI boom, with record profits in its Power Systems segment driven by strong demand for data center backup power.
The company is expanding its product range to include larger generators that can serve as primary power sources for data centers. Ford is exploring the use of excess EV batteries to power AI data centers, responding to declining demand for electric cars. Eaton, an Ohio-based manufacturer, has seen data center revenue rise to 21% of total revenue, up from 14% in 2023.
The trend has contributed to US manufacturing output reaching its highest monthly level since 2021-2022.
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