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Can CAT & Hunt Energy Transform the Future of Data Center Power Systems?

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Key Takeaways

  • Caterpillar and Hunt Energy formed a long-term collaboration to power data centers.
  • The first project in Texas could launch a program delivering 1 GW of capacity.
  • CAT shares have risen 15.3% this year, outpacing the S&P 500's 8.5% gain.

Caterpillar Inc. (CAT - Free Report) and Hunt Energy Company, L.P. have entered into a long-term strategic collaboration to meet the surging power needs of data centers. With the sector demanding uninterrupted or “always on” energy, the partnership aims to deliver scalable, efficient and highly reliable solutions tailored for data center operations. The partnership brings together more than 190 years of combined industry experience, leveraging Hunt’s proven expertise in energy infrastructure and Caterpillar’s leadership in power systems.

Caterpillar’s diverse portfolio in power solutions includes natural gas and diesel generation equipment, gas turbines, switchgear, controls, aftertreatment and engineering design services. CAT will also provide leading edge monitoring and servicing capabilities to ensure uninterrupted power delivery, with or without a connection to the power grid.

Hunt Energy brings its deep know-how in infrastructure development, project financing and operational execution for data center and distributed energy resource projects. The company also has significant capabilities in battery energy storage (BESS) projects, having deployed more than 310 MW of BESS solutions in the last four years.

The first joint project under this collaboration is planned for Texas and is expected to serve as the launchpad for a multi-year program to deliver up to 1 gigawatt of power generation capacity for data centers across North America. The long-term vision includes expanding the platform to other regions as the global demand for resilient data center infrastructure accelerates.

Over the past decade, the world has undergone a profound digital transformation. At the core of this are data centers, which process and store immense amounts of information. With millions of customers relying on data centers for uninterrupted access to information, operators face mounting pressure to ensure continuous operations and to build in redundancies that mitigate downtime and prevent costly outages.

Vertiv (VRT - Free Report) has carved a niche as a specialist in critical digital infrastructure. The company provides integrated solutions spanning power management, thermal management and IT management systems. Vertiv’s offerings are widely adopted by hyperscale cloud providers and colocation facilities, thanks to their scalability and high reliability. With a growing emphasis on energy efficiency and sustainability, Vertiv is actively developing liquid cooling and advanced UPS systems that support the increasing power density of AI-driven data centers.

Eaton Corporation plc (ETN - Free Report) is a diversified power management company and a global technology leader in electrical components and systems. The new AI training data centers requires both high power and density, which is creating a new opportunity for growth for this power management company. Eaton has invested more than $8 billion in transformative portfolio management and will be able to focus on the remaining businesses that will allow it to further improve earnings in the long run. Eaton completed the acquisition of Fibrebond for $1.4 billion, enhancing its ability to serve data center, industrial, utility and communications customers.

CAT’s Price Performance, Valuation & Estimates

CAT shares have gained 15.3% so far this year compared  with the industry’s 15.2% growth. In comparison, the Zacks Industrial Products sector has gained 6.2%. The S&P 500 has moved up 8.5% in the same time frame.

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Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 20.84X compared with the industry average of 19.73X.

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The Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 16.7%.  The earnings estimate for 2026 indicates 16.7% growth. While the earnings estimates for Caterpillar for 2025 have moved down over the past 60 days, the same for 2026 has moved up, as shown in the chart below.
 

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Caterpillar stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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