Caterpillar’s Engine Demand Rises, Beaten The Construction Equipment Sales

Do you also think of Caterpillar as a manufacturer of only construction equipment? 

You are not alone. Many people out there think of that yellow heavy construction equipment when they hear “Caterpillar.”

The interesting thing is it is not only the manufacturer of equipment but also many other products that are gaining popularity around the globe.

Recently, Caterpillar has revealed that its engine and turbine sales have surpassed the equipment sales, making them the most demanding products and brands in town.

What lies behind the tech enhancement?

Artificial intelligence, cloud computing, and massive data storage requirements are driving a dramatic increase in global energy consumption. To meet this demand, data centers need massive amounts of backup and prime power, which Caterpillar is well-positioned to provide. Its engines and turbines, including the G3520K and Titan 350, are proving to be the preferred choice for energy-intensive industries such as oil and gas, marine, mining, and power generation.

In a recent statement, Caterpillar CEO Joe Creed talked about this change, pointing out that many people are still ignorant of the scope and expansion of their Energy & Transportation business. Although the company’s heavy machinery division is still important, its engine and turbine solutions are driving the majority of its revenue.

Is Caterpillar investing in future green energy?

Caterpillar is investing $725 million to expand its Large Engine Center in Lafayette, Indiana, in order to meet demand. The biggest investment ever is currently being made in this facility, which first opened in 1982. People are still curious about what Caterpillar is bringing to the market.

However, the company is simply focusing on increased production of both new and aftermarket parts of engines, which already started in 2024. 

At this site, almost 1900 people are working, and it will open hundreds of jobs after its completion. 

The goal of this action is to get ready for a long-term change in the demands for infrastructure around the world, not just to produce more engines. Caterpillar is putting itself in a strategic position to be at the forefront of growth areas such as data center backup systems, natural gas solutions, and distributed power generation.

What does the data say?

Caterpillar’s 2023 annual report states that the Energy & Transportation division generated $28 billion in sales, representing an 18% growth rate. The Construction Industries division reported $27.4 billion, a 9% increase, in contrast. The momentum continued until 2024. While Energy & Transportation grew 3% to $28.9 billion, the Construction Industries segment fell 7% to $24.5 billion.

Even in early 2025, the divide is clear. Energy & Transportation generated $6.6 billion in revenue in the first quarter, down only 2% year on year, while Construction Industries revenue fell 7% to $5.2 billion. Cat executives stated that this trend is expected to continue into the next quarter, owing to continued strong performance in power generation and oil and gas projects.

Is construction equipment still in focus?

Interestingly, while Caterpillar construction equipment segment is declining, data centers remain a bright spot in the overall construction industry. According to economists from the Associated General Contractors and the Associated Builders and Contractors, data center construction will be one of the strongest markets in 2025.

According to AGC’s chief economist, Ken Simonson, the surge in data centers is driving record-breaking investment in battery storage and dedicated power systems. Anirban Basu of ABC echoed this sentiment, revealing that one in every seven ABC members is currently working on data center projects.

The Dodge Construction Network’s June 2025 report backs up this claim. It reported a 6.8% increase in nonresidential project planning, owing primarily to strong momentum in the data center sector. Major projects in the works include a $500 million data center campus in Middletown, Virginia, as well as $300 million buildings in Tucson, Arizona, and Laredo, Texas.

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