By Nathan Gomes and Nandan Mandayam
Oct 29 (Reuters) - Caterpillar narrowly beat third-quarter profit estimates on Thursday, buoyed by AI-driven demand for power-generation equipment, but its unchanged annual sales forecast raised questions over how long the data-center boom can drive growth.
Shares of the company, a bellwether for the global industrial economy and known for its big yellow bulldozers and large mining trucks, fell over 10% premarket after the results.
Caterpillar has benefited from the
AI-driven expansion of data centers across the US, which boosted demand for construction equipment and generators. However, investor sentiment has weakened amid growing opposition to data centers and calls to slow AI development.
Its order backlog for the third quarter swelled to a record $78.1 billion, up $6 billion from the previous quarter. But the increase was slower than the pace seen earlier this year.
Caterpillar's shares have been under pressure over the last few months, dropping more than 20% since August, as investors seek reassurance that the company can sustain the momentum of revenue and earnings growth driven by data center customers.
The company expects 2026 revenue to grow in the mid-to-high teens range, while analysts expect growth in the high teens percentage, or roughly 18%.
Caterpillar also kept the annual tariff cost forecast of around $2.2 billion unchanged.
Its quarterly revenue rose 17% to $20.7 billion, beating analysts' forecast of $20.55 billion, according to data compiled by LSEG.
The company reported an adjusted profit of $7.20 per share for the quarter through September, compared with $4.95 per share a year earlier and analysts' average expectation of $7.08.
For the last four quarters, the company has topped Wall Street's earnings expectations by no less than 40 cents, and last quarter it beat profit estimates by nearly $2 per share.
Oppenheimer analyst Kristen Owen said the quality of the company's earnings beat gives investors "a chink in the CAT armor" despite Caterpillar's broad-based growth.
Caterpillar said its third-quarter operating profit included $128 million in benefits related to IEEPA tariff recoveries.
(Reporting by Nandan Mandayam and Nathan Gomes in Bengaluru; Editing by Shinjini Ganguli)
