The Point for North America

Research evidence excerpt

The Point for North America

US Machinery - CAT & CMI Data Center Note 2: Digging into Supply/Demand

In the second of our multi-note series on CAT’s and CMI’s data center businesses

(note 1 here), we dig into the data center supply/demand outlook for onsite backup

and prime power. With a significant capacity buildout expected across the

industry through 2030+, we have observed a growing debate around whether

there will be enough incremental demand to satisfy that supply. Overall, we see

little risk of industry oversupply through 2030 for both onsite backup and prime

power. Using what we deem as our most realistic assumptions for what industry

capacity utilization could look like, we believe the industry supply/demand

dynamics could start to loosen in the early 2030s. As a result of this analysis, our

CAT and CMI data center revenue estimates for 2026-2030 are little changed,

although we have brought down our 2031-2040 estimates as the industry

supply/demand looks more challenged than we initially thought in those years.

Kyle Menges

Backup Power Capacity Utilization Required to Onsite Prime Power Capacity Utilization

Match Citi’s Estimates for Backup Power Required to Match Citi’s Estimates for Onsite

Demand, Assuming Some Capacity Exit Prime Power Demand, Assuming Some

Capacity Exit

Capacity Utilized Avg. Capacity During Period Capacity Utilized Avg. Capacity During Period

80 45

70 40

60 35

50 30

Gws 40 Gws 2025

30 15

20 10

10 5

0 0

North America Specialty Chemicals - 2Q26 Specialty Chems and Gases Preview;

ECL as Top Pick

We caught up with our specialty chemical and industrial gas companies into 2Q26

earnings season. Broadly, the group has fared better than commodity chemicals in

recent weeks with de-escalation themes driving the price/cost expansion

narrative.