Updated 6 - Caterpillar maintains annual sales forecast despite cost pressures, share price plummets

Rewrite the first paragraph based on the analysts' conference call, update the stock price data in the second paragraph, and add conference call details to the fifth and sixth paragraphs

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Reuters, October 29 - Although data centers are fueling strong demand for Caterpillar CAT.N’s power equipment, the company maintained its annual sales growth forecast on Thursday amid cost pressures and increasing investor skepticism about the AI boom.

The company’s share price plummeted 8%, on track for the biggest single-day drop since April last year. Against the backdrop of a 0.24% decline in the Dow Jones Industrial Average, it was the second-worst performer in the index.

Known for its yellow bulldozers, the company has benefited from the rapid expansion of power-hungry data centers across the United States, which has driven demand for its construction equipment and generators.

However, increasing opposition to data centers and calls to slow the development of artificial intelligence have weakened investor confidence.

During the post-earnings analyst call, Caterpillar executives reassured investors about continued demand for backup power systems but noted that the launch of new capacity continues to constrain the company's growth.

The company said it was ramping up production of engines and turbines, but added that the time required to expand manufacturing capacity limits its ability to meet rising demand.

Caterpillar expects revenue growth of 15% to 19% by 2026, whereas analysts had previously expected growth toward the high end of the double-digit range, or about 18%.

Caterpillar’s Vulnerability

Caterpillar CEO Joe Creed said the company “has clear visibility into demand (and has exceeded existing order levels),” and this trend will continue through 2030 in some cases and even longer in others.

Its quarterly order backlog rose to a record $78.1 billion, an increase of $6 billion from the previous quarter. However, the increase was smaller than in previous periods, and according to JPMorgan, this rise may be below the bullish market expectations of $80 billion.

Oppenheimer analyst Kristen Owen said that while the company achieved across-the-board growth, its earnings beat has revealed “cracks in Caterpillar’s armor” to investors.

Due to tariffs and record-high diesel prices pushing up shipping costs, the company expects its revenue growth this quarter to slow from last year’s 18% level.

Caterpillar also kept its annual tariff cost forecast unchanged at about $2.2 billion.

According to data compiled by London Stock Exchange Group (LSEG), the company’s third-quarter adjusted earnings per share rose to $7.20, compared with analysts’ expectations of $7.08.

In each of the past four quarters, the company’s earnings exceeded Wall Street expectations by at least 40 cents, while last quarter’s earnings per share beat expectations by nearly $2.

(For the convenience of non-English speakers, Reuters has automated this report's translation into several other languages. Automated translation may contain errors or lack necessary context—Reuters does not guarantee the accuracy of automated translation and provides it only for readers’ convenience. Reuters accepts no liability for any damage or loss arising from the use of automated translation.)