Meet the trucks-and-bulldozers companies getting rich from the AI boom

In the bustling landscape of data center construction across the United States, industrial leaders like Caterpillar, Cummins, Generac, and Rolls-Royce are reaping the rewards of the burgeoning artificial intelligence market. Traditionally recognized for their heavy machinery, these companies are now pivotal players in the supply of generators that fuel the AI revolution. Data centers, which require substantial power to operate, are increasingly depending on these robust generators. Capable of supplying electricity to over 1,000 homes, these machines ensure that AI systems and cloud services function seamlessly. As the demand for AI technology continues to grow, companies like Caterpillar and Cummins are experiencing a financial windfall, with their stock prices outpacing many tech giants, including Amazon and Meta. This trend echoes the historical role of picks-and-shovels vendors during the California Gold Rush, where industrial suppliers found their fortunes by providing essential equipment. Alongside these giants, other non-tech firms, such as Primoris and Dycom Industries, are also benefiting by laying the infrastructure needed for data centers, connecting them to natural gas and the internet. Tom Shepherd, a data center executive at Cummins, highlights the unprecedented scale of the power generation business today. Reflecting on past operations, he noted that a decade ago, his focus was on smaller clients like hospitals, with only one large data center operated by Google in his territory. Fast forward to today, and Alphabet, Google's parent company, is expanding rapidly, with plans to invest upwards of $91 billion in its data centers by the end of the year. For manufacturers like Caterpillar and Cummins, who have navigated challenges such as tariffs and high interest rates, the demand for data center power generation is a much-needed boost. Cummins reported $2.6 billion in power-generation equipment sales to the data center sector last year, with expectations of a 30-35% increase this year. Caterpillar's power-generation segment also saw significant growth, rising from 8.4% of its total sales in 2021 to over 14% in the first three quarters of this year. Stock performance has mirrored this growth, with both companies achieving record highs. Analysts are optimistic, noting a rise in the percentage of those recommending Caterpillar stock, increasing from 41% to 54% in the past year. Despite some concerns about market valuations, with Caterpillar’s power-generation arm being highly valued by investors, executives remain confident. Melissa Busen from Caterpillar points to a $39.8 billion order backlog, indicating strong future demand. The company is also expanding its engine manufacturing capabilities in Indiana, aiming to double output by 2027. The surge in generator demand is not limited to the U.S.; Cummins is investing $200 million in its manufacturing operations across India, England, and the U.S. to meet global needs. As the race for power accelerates, companies are increasingly focusing on integrated solutions that encompass generators, batteries, and control systems to meet the evolving demands of data centers. However, the growth and infrastructure required to support this expansion present significant challenges. Shepherd underscores that the current limiting factor is society's capacity to build the necessary infrastructure to sustain this rapid growth in power generation.