Summary

• I like simple stories. AI needs power fast, and Caterpillar can help solve that bottleneck.
• I’m not surprised by CAT’s rerate over the past year, as the market now sees this once-boring cyclical stock as a key player in AI power (both backup and primary).
• That said, the Power Generation segment was only 16.2% of Q1 sales. I like its 41% YoY growth, but I want to see more concentration over the next quarters.
• The record $63B backlog, up 79% YoY, shows strong demand. That said, either the Street is underestimating CAT’s growth, or backlog conversion may take longer than bulls expect.
• I remain bullish on Caterpillar, even though I favor some of its peers.

I don’t know about you, but every time I see a bottle now, I look at the neck first. Bottlenecks have become one of those things I cannot unsee anymore. Wine bottle, water bottle, AI data center buildout. Same idea, right?

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of GNRC, GEV, BE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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