AI's Power Hunger Sends Caterpillar Orders Soaring — Tariffs Spoil the Party

Key takeaways

• Strong earnings and revenue growth are offset by significant tariff‑related costs that could erode margins and pressure future cash flow.
• Adjusted earnings $7.20 per share
• Revenue $20.682 billion
• Operating profit $4.214 billion

What happened

Caterpillar Inc. (CAT) reported third‑quarter 2026 earnings that beat expectations, with adjusted earnings of $7.20 per share versus analysts’ $7.08 and revenue of $20.682 billion versus the $20.545 billion forecast. The company’s operating profit rose 38% to $4.214 billion and operating margin climbed to 20.4%. However, the company warned that tariff costs of roughly $600 million this quarter and an additional $600 million next quarter will push full‑year tariff expenses to about $2.2…

Why it matters

The earnings beat and revenue growth signal strong demand, especially in Power & Energy and Construction Industries, and a record $78.1 billion backlog. Yet the looming tariff costs and margin squeeze could temper future profitability and affect the company’s cash‑flow outlook, leading investors to reassess the…

Short-term and longer-term

Short-term. Over the next few days, CAT shares may continue to test the 9‑week low as traders digest the tariff impact.

Longer-term. For investors looking ahead, the main concern is whether the record backlog and strong Power & Energy demand can sustain cash flow in the face of rising tariff costs.