By JED GRAHAM

Caterpillar (CAT) blew away fourth-quarter earnings estimates early Thursday as power equipment sales for data centers fueled record sales, even though tariff costs weighed on the bottom line. CAT stock climbed near an all-time high in early stock market action, helping to lift the Dow Jones Industrial Average.

Though Caterpillar is known for its construction and mining equipment, power-and-energy division sales now make up nearly half the company's total, rising 23% from a year ago to $9.4 billion in Q4. Sales of reciprocating generator sets for data center applications have been the big driver. However, construction and resource industry segment sales each grew by a double-digit percentage, reflecting broad-based strength.

Fourth-Quarter Earnings

Results: Caterpillar posted Q4 adjusted earnings per share of $5.16, steamrolling estimates by 45 cents. Still, EPS only inched up 0.4% as tariffs weighed. The company had indicated in October that tariffs would cost between $650 million and $800 million in Q4.

Revenue jumped 18% to $19.13 billion, nearly $1.4 billion ahead of estimates, driven by power equipment and construction sales. Construction equipment sales grew 15% to $6.9 billion, while resource industry sales rose 13% to $3.4 billion. Financial product sales rose 7% to $1.095 billion. The subtotals include some intersegment sales that are subtracted from Caterpillar's full results.

Factoring in the extra tariff costs, construction and resource segment profits fell 12% and 24%, respectively. Power and energy segment profit grew $364 million, or 25%, despite the tariffs.

Outlook: Caterpillar said its order backlog eclipsed $51 billion, surging 28% from Q3 and 71% from a year ago.

For 2026, Caterpillar expects revenue growth near the top of its 5% to 7% longer-term compound annual growth rate target. Tariffs imposed in 2025 are expected to cost around $2.6 billion. Including the tariffs, adjusted operating profit margin is seen near the bottom of its long-term target range.

Free cash flow, excluding capital spending and discretionary pension contributions, is expected to run slightly lower than in 2025.

CAT Stock

Caterpillar rose 1.4% to 652.50 early Thursday. That put CAT on track to test its Jan. 16 intraday record of 655.68.

CAT was the top-performing Dow Jones stock of 2025 with a 59% gain, and is again leading the Dow in 2026 through Wednesday, with a 13.9% gain.

Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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This article was first appeared on Investor's Business Daily