Meet the trucks-and-bulldozers companies getting rich from the AI boom (www.businessinsider.com)

Caterpillar, Cummins, and other industrial companies are experiencing a financial windfall from the AI boom, primarily by supplying generators for data centers that power AI technologies. These companies, known for heavy machinery and engines, have reported significant growth in their power-generation segments. Caterpillar's generator sales alone jumped from 8.4% to over 14% of total sales within two years, highlighting the rising demand for electricity in data centers. As firms like Amazon and Google ramp up their data center expansions, these generators, capable of supplying power to thousands of homes, have become essential for ensuring uninterrupted AI operations. This trend underscores a shift in profitability from traditional tech giants to industrial manufacturers, akin to the “picks-and-shovels” analogy from the Gold Rush era. Analysts are optimistic about the continuing demand, evidenced by Cummins expecting a 30-35% increase in power-generation sales this year. However, some caution arose when concerns about inflated valuations emerged; Caterpillar's power division was priced at 60-100 times its operating income, compared to Nvidia's 25 times. Despite these apprehensions, companies are investing heavily in infrastructure to meet demand, with Caterpillar planning a significant expansion at its Indiana facility by 2027. The focus is not just on backup generators but integrated solutions to support the growing energy needs of AI-driven data centers.