Machinery CAT/CMI Capacity Expansion Amid BTM vs. FTM Debate: A Primer

Research evidence excerpt

Machinery CAT/CMI Capacity Expansion Amid BTM vs. FTM Debate: A Primer

Tami Zakaria, CFA AC North America Equity Research

(1-212) 622-9888 17 June 2026 J P M O R G A N

tami.zakaria@jpmchase.com

incremental data center critical IT power demand by 2028 (latest publicly available forecast);

McKinsey predicts ~114GW by 2029; VRT forecasts ~138GW by 2030; IEA forecasts

~106GW by 2030. With 2N prime+backup power requirement for a typical data center, the

demand for incremental backup power should be at the same amount, if not more after

considering PUE and redundancy requirements. This compares with CAT and CMI’s recip

engine capacity expansion of ~50GW (~20GW from CMI and ~30GW from CAT, per JPMe)

by 2030. (6) Sizing the service/parts opportunity: the recurring revenue/earnings power

is in the installed prime power base. As an illustration and acknowledging that it's hard to

predict what the landscape will look like in 2030 and beyond, we used a variety of estimates

and calculated >$40 DCF per share for CAT from service/parts opportunity of the incremental

capacity by 2030 (i.e., this does not account for the existing installed base), assuming ~44%

of the incremental installed base between 2025-30 of recips and turbines will be used for

prime power generation, while we get <$5 DCF per share for CMI assuming ~5%f the

incremental installed base will be used for prime power following the latest announcement

with Circe Energy (see here) and the pending launch of the 4MW natural gas engine in late

2027/early 2028. Note that we hope to use this DCF analysis as a framework for future

announcements of capacity additions and/or partnerships for prime power solutions by either

company. This calculation excludes the already installed base and assumes no share shift