CAT Ends Q2 With Record Backlog: Is Demand Momentum Here to Stay?

Caterpillar Inc.’s CAT second-quarter 2026 results highlighted record revenue and earnings growth, but its record order backlog may be the most important signal for investors. Backlog provides insight into future demand and revenue visibility, offering a clearer view of business momentum over the coming quarters.

Caterpillar ended the second quarter of 2026 with a record backlog of $72 billion, 92% higher than last year. Backlog increased across all three segments, reflecting broad-based demand strength throughout the company’s portfolio. 

Around 59% of this sizeable backlog is expected to be delivered over the next 12 months. This percentage has remained relatively stable over the past three quarters, highlighting the strength and consistency of demand.

The strong order book also supports management’s improved 2026 outlook. Caterpillar now expects mid-to-high teens growth in sales and revenues from 2025, compared with its previous expectation of low-double-digit growth.

In Construction Industries, North American demand continues to benefit from elevated infrastructure spending under the Infrastructure Investment and Jobs Act (IIJA). Investments in critical infrastructure and data center construction are also supporting activity. During the second quarter, CAT delivered its first units to Major Projects, a specialized, CAT dealer-owned rental joint venture serving multibillion-dollar projects across North America. The venture is expected to expand Caterpillar’s presence in the rental market.

The Resource Industries segment should benefit from favorable commodity prices and replacement demand for aging mining fleet. Mining customers are also increasingly adopting autonomous technologies to improve productivity, lower costs and enhance safety. Caterpillar acquired RPMGlobal in February 2026 and recently acquired Skycatch, strengthening its mining technology, data analytics and software capabilities.

In the Power & Energy segment, growth is being driven by sales of both reciprocating engines and turbines and turbine-related services, driven by increasing energy demand to support data center build-out related to cloud computing and generative Artificial Intelligence (AI). CAT is seeing demand for prime power solutions trend higher as data center customers look for alternative power solutions to keep pace with their growth.

To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform. It plans to bring about 1.5 gigawatts of capacity back online, with shipments to begin in the fourth quarter. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. It is currently shipping PGM130 from the facility, a product that is popular for data center power generation.  

Caterpillar Peers Also See Improving Order Momentum

Terex Corporation TEX ended the second quarter with a backlog of $6.9 billion, up 3.9% year over year, driven by increased bookings in each segment. Bookings of $2 billion increased 25.2% year over year and reflect a book-to-bill of 90%. Supported by its healthy order book and favorable end-market conditions, Terex raised its 2026 sales outlook to $7.9-$8.2 billion from the previous $7.5-$8.1 billion.

Astec Industries ASTE ended the second quarter with a backlog of $601 million, reflecting a 58% year-over-year increase led by strong demand for aggregate processing equipment. Materials Solutions backlog surged 150.6% to $312.5 million, while Infrastructure Solutions segment’s backlog increased 12.7% to $288.6 million. Overall implied orders reached roughly $460 million in the quarter, up 6.7% sequentially, while the consolidated book-to-bill ratio was 113%. 

Although considerably smaller than Caterpillar, both Terex and Astec reported expanding backlogs. This suggests customers in the industry continue to commit capital to construction and infrastructure projects despite economic uncertainty. 

CAT’s Price Performance, Valuation & Estimates

CAT shares have gained 10.5% over the past six months compared with the industry’s 5.4% growth. 

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Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 28.68X compared with the industry average of 26.65X. 

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The Zacks Consensus Estimate for CAT’s 2026 earnings indicates year-over-year growth of 39.4%. The consensus mark for revenues implies an increase of 15.5% for the year. The earnings estimate for 2027 indicates 21.7% growth, with revenues rising 21.7%.

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Earnings estimates for Caterpillar for both 2026 and 2027 have moved up over the past 60 days, as shown in the chart below.

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

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