Caterpillar Inc

Caterpillar closed out its centennial year with a decisive earnings beat, as the industrial giant's booming Power & Energy division helped drive fourth-quarter revenue to $19.13 billion, up 18% year-over-year and well ahead of the $17.76 billion consensus estimate. Earnings per share of $5.16 topped analyst expectations of $4.71 by 9.51%, though the headline strength masked notable margin pressure beneath the surface. The standout driver was Power Generation demand, particularly large reciprocating engines supplying data centers, which pushed the Power & Energy segment up 23% to $9.40 billion and underscores Caterpillar's growing role in AI infrastructure buildout. That volume tailwind, however, was partially offset by $1.03 billion in tariff-related manufacturing costs that compressed operating margin to 13.9% from 18.0% a year ago, a headwind analysts have flagged as a key risk for the stock. Entering 2026 with a record backlog, Caterpillar faces a dual challenge: converting strong order momentum into earnings while navigating persistent cost pressures from tariffs and a higher effective tax rate of 24.1%.