Caterpillar reported first-quarter financial results on Thursday that exceeded market expectations and raised its full-year revenue guidance. The company's total revenue reached $17.42 billion, a 22% increase compared to the same period last year, surpassing the average market forecast of $16.61 billion. Excluding one-time items, adjusted earnings per share were $5.54, significantly higher than the $4.25 reported a year earlier and well above the analyst consensus estimate of approximately $4.62 to $4.63. Following the announcement, the company's stock rose more than 7% in pre-market trading in New York, and was up 6.44% at the time of writing.
The strong performance was driven by growth in both construction and power equipment segments, with demand for equipment supporting artificial intelligence data centers emerging as a notable contributor. Caterpillar's core construction equipment division saw sales surge by 38% during the quarter, becoming the primary growth driver. The company attributed part of this increase to dealers actively replenishing inventory, alongside sustained strong customer demand in North American markets.
The energy and transportation division also delivered robust results, with revenue increasing by 22%. This segment sells generators, engines, and gas turbines widely used in industrial facilities and large-scale computing centers. Over the past year, accelerating AI infrastructure development has led to a sharp rise in power demand from data centers, driving strong sales of Caterpillar's energy equipment and supporting continued volume growth.
Dec Mullarkey, Managing Director at SLC Management, commented, "Caterpillar is clearly benefiting from the AI construction boom. Capital expenditures in this area show no signs of slowing, and Caterpillar will continue to play a critical role." Analysts had previously noted in earnings previews that, in addition to dealer inventory restocking, strong execution of AI-related orders was a key factor behind the company's better-than-expected profitability.
Caterpillar itself confirmed that its power equipment business is benefiting from the rapid expansion of AI infrastructure, with record order backlogs reported across all business segments.
Looking ahead, Caterpillar raised its full-year revenue growth outlook from a previously projected compound annual growth rate of around 7% to low double-digit percentage growth. The company also revised its estimated tariff-related costs downward from $2.6 billion to between $2.2 billion and $2.4 billion, indicating some moderation in tariff pressures.
Nevertheless, tariffs continue to exert noticeable pressure on manufacturing costs. Unfavorable manufacturing costs in the first quarter amounted to $710 million, largely linked to rising tariffs. The company noted that benefits from increased sales volumes and improved pricing were partially offset by these additional costs.
As a representative of U.S. industrial firms, Caterpillar had previously faced significant impacts from tariff policies, including higher costs for imported raw materials and production machinery, as well as broader economic pressures from delayed business activity and weak corporate spending.
Overall, Caterpillar delivered a strong earnings report driven by both AI-related demand and inventory restocking, while also raising its full-year outlook. As a barometer of the global industrial economy, its performance provides important insights into the real momentum behind AI infrastructure development.