Snapshot
Backup generators — mostly diesel, increasingly natural gas — keep data centers running when the grid fails. Every megawatt of IT load requires at least one megawatt of standby generation, and most Tier III/IV facilities maintain N+1 or 2N redundancy (one or two backup units for every unit of live load), meaning 1.5–2 MW of generator capacity is installed per MW of IT power. The global data center generator market was roughly $7.6 billion in 2025, with North America accounting for about 40% of that ($3.1B). Diesel gensets hold 81% of the market by revenue; natural gas and hydrogen-ready units are the fastest-growing segments. The installed base of diesel generation at data centers roughly tripled in five years, from about 20 GW in 2018 to 55 GW in 2024. est.
$7.6B
Global DC generator market (2025) est.
~55 GW
Installed diesel genset capacity at data centers (2024)
81%
Market share held by diesel (by revenue, 2025) est.
18 mo
Lead time for high-horsepower (>2 MW) gensets
4.6% CAGR
Projected market growth 2026–2031 est.
CAT ($427B market cap) and CMI ($94B) are diversified industrials where data center generators are a fast-growing but minority segment. GNRC ($17B) is pivoting into commercial/industrial data center power from its residential standby base. AGCO ($8.7B) is primarily an agricultural equipment company; its AGCO Power subsidiary makes generators up to 2.5 MW, but data centers are not a named market and the unit is small relative to the parent.
The product & how money is made
A backup generator set (genset) is a diesel or natural gas engine coupled to an alternator that converts fuel into electricity. When the utility grid drops out, an automatic transfer switch (ATS) detects the loss and signals the generators to start. They reach full power in 10–15 seconds and run on fuel stored on-site — diesel tanks typically hold enough for 24–96 hours of operation. UPS battery systems bridge the gap during those startup seconds.
A single genset typically produces 2–4 MW. A large data center campus deploys hundreds of them: Amazon's Manassas, Virginia facility has 93 generators at 2.5 MW each, totaling 233 MW of backup capacity (Latitude Media, Jun 2025). Redundancy standards (N+1 or 2N) mean a 100 MW data center installs 150–200 MW of generator capacity. Hardware cost is roughly $1,000 per kW of capacity — so a 100 MW backup system costs around $100–200M in generator equipment alone (NREL, Jun 2025 estimate).
The OEM revenue model has three layers: (1) equipment sales — upfront sale of engines, alternators, and control systems; (2) aftermarket parts and service — filters, lubricants, overhauls, and maintenance contracts over the 20–30 year life of the equipment; and (3) rental/temporary power — trailer-mounted units leased during construction phases or as bridge power while permanent generators are installed. Aftermarket revenue is typically higher-margin than equipment sales.
A newer use case is prime power (generator as primary electricity source, not just backup). Some data center developers are deploying natural gas gensets as the main power supply to bypass 3–7 year utility grid connection queues. Caterpillar partnered with Joule Capital Partners on a 4 GW gas-fired data center campus in Utah using CAT G3520K gensets as prime power (Power Magazine, 2026). This shifts generators from a one-time backup purchase to a continuous-operation revenue stream with higher fuel, maintenance, and replacement demand.
Sources: Latitude Media (Jun 2025), Power Magazine (2026), NREL cost estimate (Jun 2025), Fortune Business Insights market report, Mordor Intelligence DC generator report.
Demand
Contracted and visible
- Caterpillar: $63B total company backlog as of Q1 2026, an all-time high and up 79% YoY. Six framework agreements signed, each for at least 1 GW of prime power equipment. Large genset and turbine orders for data center applications grew 48% YoY in Q1 2026. (CAT Q1 2026 earnings, Apr 30 2026)
- Cummins: Orders above 2 MW surged 23% YoY. Management reported taking orders "well into 2028" for data center backup power, with discussions extending to 2029. Data center revenue reached roughly $3.5B in FY2025, up ~35% from ~$2.6B in 2024. (Cummins earnings; TIKR analysis)
- Generac: Backlog exceeded $700M as of Q1 2026, up ~$300M sequentially since mid-February. A $600M nonbinding 2027 notice to proceed from a hyperscale customer is excluded from that figure. Generac is in final vendor approval stages with 2 hyperscale data center customers. (GNRC Q1 2026 earnings call, Apr 29 2026)
Forecast
- Market size projection: The global DC generator market is projected to grow from $7.9B (2026) to $9.8B (2031) at a 4.6% CAGR. The >2 MW segment is growing fastest at 5.6% CAGR, and hyperscale/cloud service provider demand is growing at 5.9% CAGR. est. (Mordor Intelligence)
- Physical capacity math: The US currently has roughly 25 GW of data center IT capacity. An additional 55 GW is expected within five years (Bloom Energy, 2025 report). At 1.5–2x backup redundancy per MW of IT, that implies 80–110 GW of new generator capacity needed through ~2030. est.
- Prime power adds demand on top of backup: Approximately 30% of new data center sites are expected to use onsite generation as primary power by 2030, more than double the figure from early 2024 (Bloom Energy report). Prime-power generators run continuously and need replacement on a shorter cycle than backup units.
- Virginia alone: 10,500+ generator units permitted for data centers by end of 2025, totaling 27 GW of capacity — equivalent to powering ~20 million US households — in a state with fewer than 4 million homes. (Latitude Media, Jun 2025)
Some market-size and growth figures are directional estimates, not live-verified. Company financials are from most recent public filings.
Supply
Capacity
- Caterpillar raised its large-engine capacity target from 2x to 3x 2024 production levels by 2030, with capex concentrated in 2027–2029. CAT also acquired Weichai Baudouin's European distribution ($85M, Dec 2025) to expand service reach. (CAT Q1 2026 earnings)
- Cummins announced a $150M expansion at its Fridley, Minnesota plant (Feb 2026) to boost QSK95 output (3–4 MW gensets) by 30%. The QSK95 is the company's largest reciprocating engine and a primary data center product. (Mordor Intelligence report)
- Generac is bringing its Sussex, WI facility online with a target of >$1B of domestic large generator capacity by Q4 2026. The Enercon acquisition (closed Apr 1 2026) adds generator enclosure and switchgear manufacturing. Generac has secured a multi-year exclusive US engine supply agreement with a large diesel engine supplier. (GNRC Q1 2026 earnings call)
- Fidelity Manufacturing (Ocala, FL), a key genset packager serving CAT, Cummins, Generac, and others, grew from 40 to 500+ employees in under a decade. It doubled its factory footprint to ~162,000 sq ft and is adding 50,000 sq ft more. Lead times for larger data center generator packages run up to 1 year or more. (Power Magazine, 2026)
Bottlenecks
- High-horsepower engine blocks: Units above 2 MW have 18-month lead times. Only a few factories worldwide cast and machine the large engine blocks used in 2+ MW gensets. Expanding casting capacity takes 2–3 years.
- Tier 4 emissions compliance: Stricter emissions standards (Tier 4 in the US, EU Industrial Emissions Directive in Europe) add $50,000–$100,000 of after-treatment hardware per unit above 750 kW. Over 70% of Virginia's 27 GW of installed diesel capacity is older Tier 2 equipment; over half of newly permitted capacity now meets Tier 4. (Latitude Media)
- Alternator and control system supply: Large alternators are produced by a handful of manufacturers globally. Control panels and automatic transfer switches also face elevated lead times.
- Packaging and integration: Gensets must be packaged with enclosures, fuel systems, exhaust treatment, and switchgear. Packaging capacity (firms like Fidelity, Enercon) has been the binding constraint even when engines were available.
Sources: CAT Q1 2026 earnings, Cummins Q3 2025 & Q1 2026 earnings, GNRC Q1 2026 earnings call, Power Magazine (2026), Latitude Media (Jun 2025), Mordor Intelligence.
The gap
| Factor | Demand side | Supply side |
|---|
| Current installed base | ~55 GW globally (2024) | OEMs shipping at capacity; 18-month lead on >2 MW units |
| Forward additions needed | 80–110 GW of new backup capacity through ~2030 est. | CAT targeting 3x capacity by 2030; CMI adding 30% at key plant; GNRC scaling to $1B+ |
| Prime power (new layer) | ~30% of new sites may use gensets as primary power by 2030 | Requires continuous-duty rated units; different engineering from standby |
| Pricing direction | Capital cost ~$1,000/kW; Tier 4 adds $50–100K per large unit | ASPs rising as units get larger and emissions rules get stricter |
| Substitution risk | Li-ion batteries (~$1,300/kW capital, declining) compete for short-duration backup; fuel cells (~$1,500/kW) for prime power. Neither matches diesel's energy density for multi-hour runtime. Moxion (battery startup) went bankrupt in 2024. est. |
Demand for backup MW is growing faster than OEMs can add production capacity — 18-month lead times and backlogs extending to 2028–2029. The dollar market is growing at a moderate 4.6% CAGR because the underlying product is mature technology where the constraint is manufacturing throughput rather than technology scarcity. est. The prime-power use case could expand the addressable market if grid connection delays persist. Emissions regulations push ASPs higher (Tier 4 costs more) but also create an opening for gas and battery alternatives.
Sources: Mordor Intelligence, Fortune Business Insights, NREL (Jun 2025), Bloom Energy (2025 report), company earnings.
The players
| Ticker | Company | What it makes (data center relevance) | DC generator exposure | Market cap | Revenue (TTM) | P/E (TTM) |
|---|
| CAT | Caterpillar | Diesel & gas gensets (2–4 MW), engines, turbines, plus construction/mining equipment. Power & Energy segment: $7.0B in Q1 2026 (22% of revenue), power generation up 32% YoY, large gensets/turbines for DC up 48%. | ~15–20% of revenue est. | $427B | $70.8B | 46x |
| CMI | Cummins | Diesel & gas engines, gensets (QSK95 at 3–4 MW is flagship DC product), plus truck engines, components, distribution. Power Systems segment: $7.5B in FY2025 (+16% YoY), power generation within that: $1.28B in Q1 2026 (+28% YoY). Data center revenue ~$3.5B in 2025 (~10% of total). | ~10% of revenue | $94B | $33.9B | 35x |
| GNRC | Generac Holdings | Diesel & gas gensets (2.25–3.35 MW for data center), residential standby generators, energy storage. C&I segment: $510M in Q1 2026 (+28% YoY). Also liquid cooling and grid services via acquisitions. | ~25–30% of revenue (C&I segment) est. | $17B | $4.2B (FY2025) | ~106x |
| AGCO | AGCO Corporation | Agricultural equipment (tractors, combines, grain storage) via Fendt, Massey Ferguson, Valtra brands. AGCO Power subsidiary makes diesel gensets up to 2.5 MW for standby applications. "Computer halls" listed as an application but data centers are not a named market. Operations based in Tampere, Finland. | Negligible | $8.7B | $10.4B | 11x |
Other notable players (not in the ticker list)
- Rolls-Royce (mtu Solutions) — premium large gensets, flywheel-battery hybrids; secured a 72 MW natural gas order for a Frankfurt hyperscale campus (Jan 2026)
- Kohler Co. (private) — strong in sub-1 MW enterprise and edge deployments
- Rehlko (formerly Kohler Power, now independent) — data center generator specialist
- Atlas Copco — portable and rental gensets
- Aggreko — added 150 trailer-mounted units (1–3 MW) in 2025 for temporary data center construction power
Sources: CAT Q1 2026 earnings, CMI Q3 2025 & Q1 2026 earnings, GNRC Q1 2026 earnings call, AGCO Power website, Mordor Intelligence, StockAnalysis.com (market cap/PE as of Jun 3 2026).
The price of exposure
| Metric | CAT | CMI | GNRC | AGCO |
|---|
| Stock price (Jun 3 2026) | $926 | $682 | $285 | $120 |
| Market cap | $427B | $94B | $17B | $8.7B |
| TTM P/E | 46x | 35x | ~106x | 11x |
| Forward P/E | ~37x est. | ~23x est. | N/A | ~18x est. |
| TTM revenue | $70.8B | $33.9B | $4.2B | $10.4B |
| DC generator revenue | ~$10–14B est. | ~$3.5B | ~$1–1.3B est. | Negligible |
| Implied mkt cap per $1 of DC revenue | ~$30–43 | ~$27 | ~$13–17 | N/A |
| 52-week range | $345–$937 | $308–$718 | ~$120–$310 est. | $98–$144 |
| Dividend yield | 0.7% | 1.2% | 0% | 1.0% |
| TTM free cash flow | ~$8.9B (FY2025) | ~$2.1B (FY2025) est. | $268M (FY2025) | ~$450M est. |
- CAT trades near the top of its 52-week range at 46x trailing earnings, roughly 2.5x its 5-year average P/E of ~18x. Power & Energy is now CAT's largest segment. Construction and mining equipment still account for roughly 60%+ of revenue, and those segments declined in Q1 2026 (Resource Industries operating profit fell 39%).
- CMI trades at 35x trailing, above its historical 13–14x EBITDA range. Data center is ~10% of revenue but growing at 35% annually. Power Systems runs at 23–30% EBITDA margins, above the company average.
- GNRC has the highest P/E (~106x on $2.69 TTM EPS) because FY2025 net income was $160M while the stock re-rated on data center expectations. FY2026 guidance calls for $350M FCF on ~$4.9B revenue. The $700M+ backlog provides 12–18 months of visibility. GNRC has not yet shipped large gensets at scale to hyperscalers and is still in vendor approval.
- AGCO is at 11x earnings, reflecting its identity as an agricultural equipment company in a cyclical downturn (revenue fell 14% in FY2025). Its generator business (AGCO Power, Finland) is not a material contributor to revenue.
Sources: StockAnalysis.com (prices, market caps, P/E as of Jun 3 2026), company earnings releases (FY2025, Q1 2026), TIKR analysis (Cummins), MomoView (CAT).
What to deep-dive next
- CAT Power & Energy segment: What portion of the $63B backlog is power generation vs. oil & gas vs. industrial? How will the 3x capacity expansion affect margins and capex through 2030? CAT does not break out "data center" revenue as a line item.
- CMI Power Systems: $3.5B of data center revenue growing 35% annually with 23–30% EBITDA margins. The $150M Fridley expansion and QSK95 ramp are the capacity events to track. Cummins raised its 2030 target to $45–50B revenue with >20% EBITDA — the gap from current ~$34B implies ~$13B of growth.
- GNRC hyperscale vendor approval: Management described being "99 yards of the way done" with 2 hyperscale customers. The $600M nonbinding 2027 notice to proceed is the signal. Track whether the Sussex, WI plant hits its >$1B capacity target by Q4 2026.
- Prime power vs. backup structural shift: If 30% of new sites use gensets as primary power by 2030, total MW demand roughly doubles. CAT's Utah 4 GW project with Joule Capital is the test case.
- Battery and fuel cell substitution: Li-ion at ~$1,300/kW is approaching diesel at ~$1,000/kW in capital cost but cannot match multi-hour runtime. Fuel cells at $1,500/kW compete for prime power. Track whether hyperscalers begin specifying battery-only backup for short-duration needs. est.
Sources & confidence
- Grounding scan: 500-stocks Module 04, "Backup Generators & Engine Systems" sub-section
- Company filings: CAT FY2025 annual results & Q1 2026 earnings (Apr 30 2026); CMI Q3 2025 earnings & Q1 2026 earnings (May 5 2026); GNRC FY2025 annual results (Feb 11 2026) & Q1 2026 earnings call (Apr 29 2026); AGCO revenue data from StockAnalysis.com and AGCO Power product pages
- Industry sources: Mordor Intelligence DC Generator Market Report (2025); Fortune Business Insights DC Generators Market Report; Latitude Media "The data center boom is a diesel generator boom" (Jun 2025); Power Magazine "Data Centers Are Turning to Gas Generators for Prime Power" (2026); Bloom Energy 2025 Data Center Power Report; NREL cost estimates (Jun 2025)
- Market data: StockAnalysis.com for stock prices, market caps, P/E ratios (Jun 3 2026); TIKR for Cummins valuation analysis; MomoView for CAT earnings analysis
Grounded in filings/named sources: CAT Q1 2026 revenue ($17.4B), backlog ($63B), P&E segment ($7.0B), large genset growth (+48%); CMI data center revenue (~$3.5B), Power Systems revenue ($7.5B FY2025), Fridley expansion ($150M); GNRC backlog ($700M+), C&I revenue ($510M Q1), Sussex capacity target (>$1B); installed diesel base ~55 GW (Better Data Center Project via Latitude Media); Virginia 27 GW / 10,500 units (Latitude Media); market cap and P/E figures from StockAnalysis.com.
Estimates: Global DC generator market size ($7.6B), market growth CAGR (4.6%), 80–110 GW of new capacity needed through 2030, CAT/GNRC data center revenue as percentage of total, forward P/E multiples, capital cost per kW ($1,000 diesel, $1,300 battery, $1,500 fuel cell), AGCO generator revenue contribution. Market size definitions vary between sources (Fortune Business Insights: $433M on a narrow definition; Mordor Intelligence: $7.6B on a broader definition including all data center power generation equipment).