The Power Rivals and the PackagersNarrow moat

Caterpillar (CAT) — moat facet

In power, Caterpillar competes with engine makers and with packagers who may buy engines from it, and the winner is whoever can deliver first.

In power, Caterpillar faces two kinds of rival. The first are engine and turbine makers: Cummins, Deutz, Rolls-Royce Power Systems and Siemens Energy as principal global competitors, with Volvo Penta, FPT Industrial, INNIO, GE Vernova, Kawasaki, Everllence and Weichai among others1. The second are packagers, such as Aggreko, Generac, Rehlko and Baker Hughes, who "source engines and/or other components" from suppliers and sell complete systems2.

Power & Energy sales and profit, Q2 ($M)7,037Sales Q2 20258,238Sales Q2 20261,554Profit Q2 20252,027Profit Q2 2026Caterpillar Q2 2026 results release
Profit grew faster than sales.

The packagers are the more unusual relationship. They compete for the same data-centre customer with a finished product, but their engines come from somewhere, and Caterpillar sells reciprocating engines to other manufacturers for use in their products3. A rival at the system level can be a customer at the engine level.

What decides this contest now is supply. With lead times for gas engines and turbines extending into late 20284, the order goes to whoever can deliver, a problem discussed on the lead-times page. Caterpillar's answer is capacity: large reciprocating engine capacity going to nearly three times 2024 levels5.

For the moment Caterpillar is winning more than its share of the price: Power & Energy's segment margin was 24.6% in the second quarter of 20266.

The segment's sales to users show how strong the demand is for everyone. Power & Energy's total sales to users rose 33% in the second quarter of 2026, 32% in the first and 37% in the fourth quarter of 20257. In a market growing that fast, rivals can win orders without Caterpillar losing any.

Power generation sales growth is the gauge. At +29% in the second quarter of 20268, Caterpillar is keeping pace; a year of growth well below the data-centre market's while rivals report record orders would say the capacity came too late.

Moat trajectory: Widening

P&E margin 24.6% in Q2 2026; capacity rising.

The number that tests this moat
Reported
Power & Energy segment profit, latest quarter
$2,027M, +30% (Q2 2026)

Profit in the arena with the most rivals racing for supply; slowing well below demand growth would mean capacity came too late.

Source: Caterpillar Q2 2026 results release ↗
References
  1. ReportedThe first are engine and turbine makers: Cummins, Deutz, Rolls-Royce Power Systems and Siemens Energy as principal global competitors, with Volvo Penta, FPT Industrial, INNIO, GE Vernova, Kawasaki, Everllence and Weichai among others.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: competitive environment by segment. — FY2025 · publ. 13 February 2026 · source ↗
  2. ReportedThe second are packagers, such as Aggreko, Generac, Rehlko and Baker Hughes, who "source engines and/or other components" from suppliers and sell complete systems.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: competitive environment by segment. — FY2025 · publ. 13 February 2026 · source ↗
  3. ReportedThey compete for the same data-centre customer with a finished product, but their engines come from somewhere, and Caterpillar sells reciprocating engines to other manufacturers for use in their products.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: competitive environment by segment. — FY2025 · publ. 13 February 2026 · source ↗
  4. ReportedWith lead times for gas engines and turbines extending into late 2028, the order goes to whoever can deliver, a problem discussed on the lead-times page.
    The Motley Fool, Caterpillar Q2 2026 earnings call transcript and summary - lead times, backlog delivery, rental demand, Wamego, the 10-megawatt engine restart and Skycatch. — Q2 2026 · publ. 11 August 2026 · source ↗
  5. Third-party estimateCaterpillar's answer is capacity: large reciprocating engine capacity going to nearly three times 2024 levels.
    TIKR blog on Caterpillar's first-quarter 2026 results - large engine capacity target raised to nearly three times 2024, 2030 growth target of 6% to 9%, frame agreements and gigawatt-scale customers. — Q1 2026 · publ. May 2026 · source ↗
  6. ReportedFor the moment Caterpillar is winning more than its share of the price: Power & Energy's segment margin was 24.6% in the second quarter of 2026.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - segment results and Cat Financial credit. — Q2 2026 · publ. 4 August 2026 · source ↗
  7. ReportedPower & Energy's total sales to users rose 33% in the second quarter of 2026, 32% in the first and 37% in the fourth quarter of 2025.
    Caterpillar second-quarter 2026 retail sales statistics (sales to users), Form 8-K exhibit 99.2. — Q2 2026 · publ. 4 August 2026 · source ↗
  8. ReportedAt +29% in the second quarter of 2026, Caterpillar is keeping pace; a year of growth well below the data-centre market's while rivals report record orders would say the capacity came too late.
    Caterpillar second-quarter 2026 results release, Form 8-K exhibit 99.1 - consolidated results, cash deployment and the CEO's statement. — Q2 2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 25, 2026