Key Takeaways
- Raises 2030 sales forecast to $45-$50 billion, up from a prior $43-$48 billion.
- Boosts 2030 Ebitda margin target to over 20% from a prior 17%.
- Shares fall 4.6% as the stock’s 106% rally created high expectations.
Back
Cummins targets $50 billion sales by 2030 on AI data center boom
Cummins Inc. (CMI) boosted its 2030 financial outlook, projecting up to $50 billion in sales as demand for its backup data center generators surges from the artificial intelligence boom.
"The company is in a stronger position than we were a few years ago," CEO Jennifer Rumsey told Barron's ahead of the company's investor day in New York.
The engine maker raised its 2030 sales target to a range of $45 billion to $50 billion and expects earnings before interest, taxes, depreciation, and amortization to exceed 20%, a significant increase from prior guidance of about 17%. The power systems segment's revenue already jumped 19% in the first quarter.
Shares fell 4.6% to $638.78 on the day of the announcement, suggesting the new targets were not enough to satisfy investors after a 106% run-up in the stock over the past year.
The upgraded forecast is heavily driven by skyrocketing demand for AI data centers. Cummins is expanding its power-generation capacity by 57% to 55 gigawatts annually to meet the need for backup power from "hyperscalers" like Microsoft Corp. and Alphabet Inc. The company's Power Systems segment saw Ebitda jump 48% year-over-year in the first quarter.
Despite the sell-off, the new guidance implies annual Ebitda growth of about 15% between 2025 and 2030. Coming into the event, Cummins’ stock was trading at about 22 times expected earnings, a large premium to its historical multiple of roughly 14 times a year ago, but below competitor Caterpillar Inc.'s 33 times earnings.
Analysts noted the bar was high for the event. Baird analyst Luke Junk called the guidance raise "modest," while Citi's Kyle Menges had predicted a margin target bump of at least two percentage points, a forecast Cummins exceeded.
The guidance solidifies Cummins' position as a key industrial beneficiary of the AI buildout, but the stock's reaction shows the market has already priced in significant growth. Investors will now watch to see if the company can execute on its capacity expansion and convert the AI-driven demand into sustained profit growth in coming quarters.
This article is for informational purposes only and does not constitute investment advice.
[1] Cummins CEO Explains How to Manage the AI Boom - Barron's[2] Stellantis Presents FaSTLAne 2030 Financial Framework & Targets at Investor Day 2026[3] Stellantis to launch $70 billion business plan to 2030 with 60 new model offensive[4] Stellantis launches $70 billion business plan to 2030 including 60 new models[5] Cummins Owes C3.ai $23 Million for Fuel Tool Trade Secret Theft
