Caterpillar reported a strong Q1 2026 with record backlog and raised its full-year sales outlook to low double-digit growth, driven by robust demand in power and energy, particularly for data center applications. The company also announced a significant capacity expansion for large reciprocating engines to meet growing demand for prime power. Record backlog of $63 billion, up 79% year-over-year, with record total orders in Q1.
Caterpillar reported a strong Q1 2026 with record backlog and raised its full-year sales outlook to low double-digit growth, driven by robust demand in power and energy, particularly for data center applications. The company also announced a significant capacity expansion for large reciprocating engines to meet growing demand for prime power. Record backlog of $63 billion, up 79% year-over-year, with record total orders in Q1.
Caterpillar is raising large reciprocating engine capacity from roughly 2x to nearly 3x 2024 levels, with incremental capex primarily in 2027–2029 and MP&E capex expected to average 4%–5% of sales through 2030; 2026 capex remains around $3.5 billion.
Management highlighted record backlog, record orders, raised full-year guidance, and expanded capacity targets, signaling strong confidence in demand.
Sales and revenues rose 22% to $17.4 billion, beating expectations.
Reported gross margin was 35.08%, reinforcing the quarter's better-than-guided profitability.
Management points to generative AI and cloud computing as key drivers of data center power demand, which is accelerating orders for backup and prime power and justifying a large increase in engine capacity.
Backlog hit a record $63 billion. Management highlighted record backlog, record orders, raised full-year guidance, and expanded capacity targets, signaling strong confidence in demand.
Caterpillar is raising large reciprocating engine capacity from roughly 2x to nearly 3x 2024 levels, with incremental capex primarily in 2027–2029 and MP&E capex expected to average 4%–5% of sales through 2030; 2026 capex remains around $3.5 billion.
Management highlighted record backlog, record orders, raised full-year guidance, and expanded capacity targets, signaling strong confidence in demand.
“So, obviously, when we're capacity constrained, we're able to do a little bit more.”
“we are increasing our large reciprocating engine capacity from two times 2024 levels to nearly three times 2024 levels.”
“we're also seeing higher demand for prime power applications, which will lead to long-term service opportunities and higher demand for aftermarket components.”
“higher manufacturing costs and SG&A and R&D expenses. Higher compensation expense and strategic investments related to technology, including autonomy, are driving the higher SG&A and R&D expenses.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Free cash flowMPE | FY2026 | $9.5B | $9.5B | RAISED |
Caterpillar is seeing a significant shift in its power generation mix towards prime power applications for data centers, which is a departure from its traditional backup power focus and will drive long-term service and aftermarket growth. — This trend could pressure traditional utility infrastructure players as large-scale behind-the-meter gas generation becomes a primary power source, shifting the demand landscape for grid equipment.
… also seeing higher demand for prime power applications, which will lead to long-term service opportunities and higher demand for aftermarket components. As we've discussed, our large reciprocating engine capacity also serves a wide range of applications in addition to power generation, including oil and gas and mining, which are all expected to benefit from long-term secular growth trends. As a result of these trends, I'm excited to announce that we are increasing our large reciprocating engine capacity from two times 2024 levels to nearly three times 2024 levels. Over the last two years, we've maintained a disciplined strategy of scaling capacity in direct alignment with our growing backlog and long-term order visibility. By working closely with our customers to forecast their future requirements, we ensure that our capacity expansions are additive to our OPAC growth. Today's announcement reflects a continuation of this disciplined and measured approach. The additional investment will begin as soon as possible, but primarily occur from 2027 through 2029. As a result, MP&E capital expenditures are expected to average between 4% and 5% of MP&E sales through 2030. Based on our …
Caterpillar is expanding its large reciprocating engine capacity to nearly three times 2024 levels, citing strong demand signals from data center customers for prime power, indicating sustained high demand for power generation equipment.
… also seeing higher demand for prime power applications, which will lead to long-term service opportunities and higher demand for aftermarket components. As we've discussed, our large reciprocating engine capacity also serves a wide range of applications in addition to power generation, including oil and gas and mining, which are all expected to benefit from long-term secular growth trends. As a result of these trends, I'm excited to announce that we are increasing our large reciprocating engine capacity from two times 2024 levels to nearly three times 2024 levels. Over the last two years, we've maintained a disciplined strategy of scaling capacity in direct alignment with our growing backlog and long-term order visibility. By working closely with our customers to forecast their future requirements, we ensure that our capacity expansions are additive to our OPAC growth. Today's announcement reflects a continuation of this disciplined and measured approach. The additional investment will begin as soon as possible, but primarily occur from 2027 through 2029. As a result, MP&E capital expenditures are expected to average between 4% and 5% of MP&E sales through 2030. Based on our …