Lead Times Into 2028Narrow moat

Caterpillar (CAT) — moat facet

Caterpillar's gas engines and turbines are sold out into late 2028, which gives it pricing power and gives its rivals the customers who cannot wait.

In power generation, the limit on Caterpillar's sales is not demand but its own factories. The second-quarter 2026 call summary noted that lead times for gas reciprocating engines and turbines extend into late 2028 and beyond1. The CEO said customers were asking for more units if Caterpillar could get more out2.

Customer advances ($M)3,314Dec 20254,777Jun 2026Caterpillar Form 10-Q Q2 2026, balance sheet
Customers paying to hold a place in line.

Long lead times are a form of pricing power. A customer who needs power for a data centre in 2028 must reserve capacity now and pay a deposit. Customer advances on Caterpillar's balance sheet rose from $3,314 million at the end of 2025 to $4,777 million at 30 June 20263. Price realization in Power & Energy was positive in 2025, $592 million, while it was negative in Construction Industries4.

Caterpillar is using every shortcut it can find. It repurposed a 250,000 square foot facility in Wamego, Kansas, which previously made work tools for construction equipment, and converted it in under 12 months to package and ship power modules5. It restarted a 10-megawatt medium-speed gas engine line stopped in 2022, planning about 1.5 gigawatts of capacity with shipments from the fourth quarter6.

But lead times also invite competition. A customer who cannot wait until 2028 will look to the rivals Caterpillar names in its annual report, from Cummins and Rolls-Royce Power Systems to Siemens Energy and GE Vernova7.

The engine restart shows how the constraint is being attacked. The 10-megawatt medium-speed gas engine platform, stopped in 2022, was restarted to fill a gap between high-speed reciprocating engines and industrial turbines8. Caterpillar said it could restart production by leveraging its existing supply base along with its internal capacity9.

The lead time itself is the gauge. If it shortens because capacity arrives, Caterpillar will capture more of the demand; if it shortens because orders slow, the pricing leverage goes with it.

Moat trajectory: Widening

Customer advances up 44% in six months; capacity being added.

The number that tests this moat
Reported
Customer advances
$4,777M at 30 June 2026; $3,314M at Dec 2025

Deposits for scarce capacity; falling advances while backlog holds would mean customers no longer need to pay to reserve a slot.

Source: Caterpillar Form 10-Q, Q2 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Customer Who Cannot Wait
With lead times into late 2028, Caterpillar is sending some of the data-centre boom to its competitors.
References
  1. ReportedThe second-quarter 2026 call summary noted that lead times for gas reciprocating engines and turbines extend into late 2028 and beyond.
    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 ↗
  2. ReportedThe CEO said customers were asking for more units if Caterpillar could get more out.
    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 ↗
  3. ReportedCustomer advances on Caterpillar's balance sheet rose from $3,314 million at the end of 2025 to $4,777 million at 30 June 2026.
    Caterpillar Form 10-Q for the quarter ended 30 June 2026 - backlog, outlook, tariffs, dealer inventory, balance sheet and the RPMGlobal acquisition - financial statements and notes: balance sheet, cash flow and the RPMGlobal acquisition. — Q2 2026 · publ. 5 August 2026 · source ↗
  4. ReportedPrice realization in Power & Energy was positive in 2025, $592 million, while it was negative in Construction Industries.
    Caterpillar Form 10-K for fiscal 2025 - note on segment information: sales, profit and external sales by segment and application. — FY2025 · publ. 13 February 2026 · source ↗
  5. ReportedIt repurposed a 250,000 square foot facility in Wamego, Kansas, which previously made work tools for construction equipment, and converted it in under 12 months to package and ship power modules.
    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 ↗
  6. ReportedIt restarted a 10-megawatt medium-speed gas engine line stopped in 2022, planning about 1.5 gigawatts of capacity with shipments from the fourth quarter.
    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 ↗
  7. ReportedA customer who cannot wait until 2028 will look to the rivals Caterpillar names in its annual report, from Cummins and Rolls-Royce Power Systems to Siemens Energy and GE Vernova.
    Caterpillar Form 10-K for fiscal 2025 - Item 1 business: competitive environment by segment. — FY2025 · publ. 13 February 2026 · source ↗
  8. ReportedThe 10-megawatt medium-speed gas engine platform, stopped in 2022, was restarted to fill a gap between high-speed reciprocating engines and industrial turbines.
    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 ↗
  9. ReportedCaterpillar said it could restart production by leveraging its existing supply base along with its internal capacity.
    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 ↗
Sources
Generated September 25, 2026