CMI
Cummins
Summary
What they do:
Manufacture diesel and natural gas engines, generators, and power systems for backup and distributed power generation at data centers, sitting in L21 (Power Generation) as half of the global backup generator duopoly alongside Caterpillar.
Why they matter:
Every data center needs backup power — 100 MW of compute requires 100 MW of installed generator capacity that can activate within seconds of a grid failure. Cummins and Caterpillar supply virtually all of it. Data center revenue hit $3.5B in 2025, making it Cummins' fastest-growing end market.
Recent performance:
FY2025 revenue $33.7B, Q4 $8.54B (beat estimates by 5.3%). Power Systems segment record $7.5B (+16% YoY) with 22.7% EBITDA margin. Stock at ~$550, 2026 guidance: $34.7-36.4B revenue.
Our Verdict
Industrial powerhouse where data center backup generators are the fastest-growing segment at $3.5B annual revenue, but at $33.7B total the AI exposure is embedded, not transformative.
Structural trends
Structural
68
/ 100
Moat
6/10
Duopoly with Caterpillar — global service network, installed base switching costs
AI Exp.AI Exposure
Embedded~10% AI
Play Type
ConsensusAI Growth
~20%
Rel. Value
71
COMPELLINGPriceLIVE
$615.56
-0.44%
Live via Yahoo Finance · refreshes every 5 min
Market Cap
$85.1B
P/E Ratio
30.0
P/S Ratio
2.5x
52W High
$620.78
52W Low
$269.24
52W Chg
128.6%
Beta
1.14
Cummins has been building engines since 1919. The company manufactures diesel and natural gas engines, generators, turbochargers, and power systems used in trucks, construction equipment, marine vessels, and — increasingly — data centers. With $33.7B in FY2025 revenue and operations in 190+ countries, this is one of the world's largest industrial companies.
The data center story lives in the Power Systems segment, which hit a record $7.5B in revenue in 2025 (+16% YoY) with an EBITDA margin of 22.7% — the highest-margin segment in the company. Within Power Systems, data center backup and distributed generation is the core growth vector. Every hyperscale data center requires backup generators sized to the full facility power load — if the grid fails, generators must start within 10 seconds and carry the entire compute workload. Cummins and Caterpillar together supply the vast majority of these generators globally. Data center-specific revenue reached $3.5B in 2025.
Beyond backup, Cummins is seeing growing demand for natural gas generators as primary/distributed power sources for data centers — particularly in markets where grid interconnection timelines are too long. The company also has a hydrogen division developing fuel cells and electrolyzers, though this remains pre-commercial and management took charges associated with a strategic review of the electrolyzer business in Q4 2025.
For 2026, Cummins guided total revenue of $34.7-36.4B (3-8% growth), with Power Systems revenue up 12-17% and global power generation projected up 10-20%. The Power Systems EBITDA margin target is 23-24%, expanding further from the 2025 record.
Supply Chain Dependencies
Upstream Suppliers
Downstream Customers
The Catch
Cummins is a $34B industrial company where data center power is $3.5B — meaningful but not dominant. The stock moves on truck cycle dynamics more than data center orders. The diesel generator business faces long-term existential questions: if hydrogen fuel cells or battery backup eventually replace diesel gensets at data centers, Cummins' highest-margin segment transforms. The electrolyzer write-downs suggest the company's clean energy pivot is struggling. And at 20x forward P/E, there's no margin of safety — the stock is priced for steady execution in a challenging industrial environment.
If They Win
If data center power demand doubles and the truck cycle recovers, Cummins' Power Systems segment becomes a $10B+ business with 24%+ margins — the company's profit engine. Natural gas prime power for data centers adds a second revenue stream beyond backup. Cummins' global service network becomes the infrastructure that hyperscalers depend on to keep generators running in every geography. Revenue compounds to $40B+ by 2028 with expanding margins. The dividend grows 10%+ annually. And if the hydrogen bet eventually works, Cummins transitions from the world's largest diesel engine maker to the world's largest distributed power company — a century-old industrial that reinvented itself for the AI economy.
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Not financial advice. All scores generated via AI algorithms using public data.