Here’s a bullish case for a company that makes big yellow machines: it’s not just about construction sites anymore. According to BofA Securities, Caterpillar Inc. (CAT) has some powerful, multi-year growth drivers ahead, and one of them involves keeping the internet running.

Analyst Michael Feniger is sticking with a Buy rating and an $825 price target on the stock. That suggests he sees about 17.5% upside from where shares were trading Wednesday. The core of his argument? Caterpillar is positioned for what he expects to be a “sustained earnings recovery,” fueled by both the usual economic cycles and some newer, structural trends.

The Engine of the Digital Age

One of the most interesting parts of the thesis revolves around power—specifically, the kind needed for data centers. Feniger sees strong demand in power generation, particularly for the small industrial turbines and reciprocating engines that Caterpillar makes. Demand is so tight, he notes, that delivery timelines are stretching into late 2028 and early 2029.

Caterpillar isn’t just another supplier here. Feniger points to the company’s advantages in scale, emissions technology, and the strength of its dealer network. He singles out Western Canada as a region that could become a key data center hub, thanks to its climate, available land, and access to natural gas. And the potential scale is massive: a single 1-gigawatt data center, Feniger estimates, could require up to 400 engines. That’s not just a one-time sale; it’s a gateway to significant, long-term service revenue.

More Than Just Megawatts

The data center story is flashy, but it’s not the only thing powering the outlook. The classic Caterpillar businesses are looking strong, too. Feniger highlights steady mining activity in Canada, brownfield expansion opportunities in Chile, and long-term greenfield potential in Argentina as reforms progress there.

He lists a familiar but potent cocktail of broader economic drivers: easing interest rates, improving commodity prices, government infrastructure spending, higher capital expenditures in mining and energy, and the simple fact that many equipment fleets out there are getting old and need replacing.

Paying a Premium for the Cycle

This confidence in a “multi-year upcycle” is reflected in how Feniger values the stock. He’s applying a multiple of 27.5 times projected 2027 earnings, which is above the company’s historical averages. It’s a premium price for what he believes will be premium, sustained performance.

Of course, it’s not all smooth digging. The analyst also flags risks, including potential margin pressure from tariffs, the chance that customers might delay spending, and pricing competition. But his overall long-term view remains firmly positive.

On Wednesday, Caterpillar shares were trading 0.54% higher at $706.18, inching closer to that $825 target. The thesis is that the company famous for moving earth is now perfectly positioned to power the infrastructure of the future, one data center and mine at a time.