High-and-Heavy Equipment Makers Tap Into Data Centers for Growth

Why It Matters

The shift highlights data‑center expansion as a new growth engine for heavy‑equipment makers, cushioning sector‑specific downturns and reshaping capital‑goods demand.

Key Takeaways

• Deere expects 15‑20% drop in U.S./Canada farm equipment sales.
• Data‑center construction drives 60% rise in Deere’s construction orders since Nov.
• Caterpillar’s order backlog jumps 79% to $63 billion, fueled by AI‑related data centers.
• Deere invests $20 billion in U.S. manufacturing over next decade, boosting domestic sourcing.
• Deere’s construction sales $3.8 billion (+29%); Caterpillar’s $7.2 billion (+38%).

Pulse Analysis

The rapid build‑out of data centers is becoming a catalyst for the heavy‑equipment sector. Cloud providers and AI firms are committing billions to new facilities, which require extensive site preparation, power infrastructure, and backup generators. This surge translates into higher demand for excavators, cranes, and turbine generators—products that Caterpillar and Deere specialize in—creating a new revenue stream that partially offsets weakness in their traditional markets.

Deere’s agricultural segment faces a tough outlook, with a projected 15‑20% decline in U.S. and Canadian farm equipment sales driven by higher input costs and geopolitical uncertainty. A $272 million tariff refund and a revised $2.2 billion tariff cost estimate provide modest relief, but the company is betting on construction growth. Deere is pouring $20 billion into domestic factories, including a $70 million investment in North Carolina‑built excavators, to improve cost control and capture the booming construction pipeline, which saw a 29% jump to $3.8 billion in the latest quarter.

Caterpillar is riding a similar wave, with its order backlog swelling to $63 billion—a 79% year‑over‑year increase—largely from data‑center projects that need reliable power and cooling solutions. The firm reported a 38% rise in construction equipment sales to $7.2 billion and a 22% increase in power and energy sales, underscoring the diversification of its revenue base. Both companies’ outlooks now hinge less on cyclical agriculture and more on sustained capital spending in digital infrastructure, positioning them to benefit from the long‑term expansion of the cloud and AI economy.