Caterpillar Hits Record $78 Billion Backlog on AI Power Demand

Caterpillar's order backlog reached a record $78 billion, up 96% from a year earlier, as AI data centers drive demand for the company's turbines and large reciprocating engines. The figure anchors the investment case that fund manager Kevin Simpson laid out on CNBC's Trade Tracker segment on November 13, 2026, where he said he is buying more shares of the industrial maker after a steep slide.

Simpson framed the purchase as a value entry into the AI buildout rather than a chip-sector bet. "We looked at Caterpillar as an adjacent trade to the AI," he said. He described the stock as "probably a stock that moved far too fast, too far, but has come down dramatically."

How Steep Is the Pullback?

The numbers support his description. Caterpillar trades near $595.96, down 22.7% over the past month from $770.96 and roughly 44% below its 52-week high of $1,068.93. The stock sits below both its 50-day average of $752.06 and its 200-day average of $808.13. A 7.64% bounce over the past week still leaves shares up just 4.92% year to date.

The selloff hit AI-linked names together rather than selectively. On CNBC's Fast Money, Steve Grasso described money rotating into defensives: "Caterpillar is down 30 and semiconductors down 30." The correlation cuts both ways: Caterpillar gains when AI sentiment runs hot, and it falls alongside chipmakers when that sentiment cracks.

How Does a Bulldozer Maker Supply AI?

The mechanism runs through electricity. AI data centers need enormous amounts of power, and Caterpillar sells turbines and large reciprocating engines that provide backup and on-site prime power for those facilities.

The revenue data show the shift. Supporting Generation revenue rose 30% to $3.421 billion in the third quarter, after gains of 44%, 41% and 29% in the three prior quarters. Power generation sales to users jumped 75%. Large engine orders now stretch to 2029, and turbine orders run into 2030.

Chief Executive Joe Creed said on the earnings call: "What we're hearing from our customers is they still want more from us if we can get them more power."

What Sits Beyond the AI Story?

Simpson argued the thesis does not rest on data centers alone. "It's not just an AI trade," he said. "There's also mining, there's industrial. There's a lot here."

The third-quarter results, filed in an SEC earnings release, bear that out:

• Construction Industries revenue grew 18% to $7.983 billion; Creed noted that data centers "have a little bit of a rollover into CI as well."
• Resource Industries rose 15% to $4.615 billion on copper, gold and Canadian oil sands demand.
• Oil and Gas added 13% on gas compression.
• Total revenue reached $20.68 billion, and adjusted EPS of $7.20 topped the $7.04 consensus.

In short, the AI power business sits on top of mining, construction and gas compression units that grow on their own cycles.

What Do Valuation and Ratings Show?

After the drop, Caterpillar trades at a trailing P/E of 23 and a forward multiple of 18. The quarterly dividend of $1.63 annualizes to $6.52, a yield near 1.1%, and the company bought back $1.2 billion of stock in the quarter.

Analyst sentiment leans positive: 2 Strong Buy, 15 Buy, 11 Hold and 1 Sell ratings, with an average price target of $823.41. That target sits well above the current price, implying analysts see recovery value even after the recent bounce.

What Could Extend the Slide?

Capacity is the constraint. Creed admitted "there's no slack in the system" following a test cell outage. Tariff costs are expected around $2.2 billion for 2026, keeping margins near the bottom of the company's target range.

Mining adds cyclical risk. Resource Industries sales to users grew only 4%, below expectations, on shipping and setup delays. A beta of 1.64 means the stock moves harder than the market when construction or commodity cycles turn.

The core tension is straightforward: chip stocks offer purer AI leverage, while Caterpillar offers more ways to win but still trades with AI sentiment. The next test arrives at the fourth-quarter earnings report, where management plans to discuss 2027 guidance and investors will watch whether the backlog keeps climbing and margins lift off the bottom of the range.