For most of the past decade, owning Cummins (CMI) meant betting on heavy trucks, diesel engines, and the health of the freight economy.
But that narrative is quickly becoming outdated.
The company has spent 2026 pivoting into something investors didn’t expect: a strategic player in the AI electricity shortage.
Its shares have more than doubled over the past year and now trade near record highs.
But the question remains whether or not the growth is durable.
Cummins stock climbs on a West Texas data center power deal
On June 16, Cummins said it had signed an agreement with Circe Energy to supply natural gas generator sets for a behind-the-meter microgrid that will power a high-performance computing campus in Texas.
Shares rose about 3% on the news and kept climbing through the week, rising up to 8.19% in the past 5 days.
The deal landed as electricity has become the hardest bottleneck in the AI build-out. Developers can secure chips and capital quickly, but plugging a giant campus into the grid can take years.
That timing problem is exactly what Cummins is positioning itself to fix.
UCG / Getty Images
What Circe Energy actually ordered from Cummins
Circe Energy’s initial announcement, reported by Business Wire, disclosed a strategic agreement with Cummins to deliver approximately 2 gigawatts of natural gas generating capacity between 2026 and 2030, a figure subsequently highlighted by UBS analysts.
The infrastructure is built around two Cummins platforms, the HSK78 and the QSK60.
Here is the part that matters:
The generators operate “Behind-the-meter,” meaning they sit on-site and act as the primary power source, so the campus runs without leaning on the public grid.
Circe plans to switch on its West Texas site in phases starting in 2027, according to the company’s press release.
That phased design lets Circe add power as compute demand grows, rather than waiting on one large grid connection.
Why AI data centers are desperate for on-site power
The strain is real and rising.
While U.S. data centers consumed roughly 4% of the nation’s electricity (183 terawatt-hours) in 2024, domestic tracking expects a 133% surge to 426 terawatt-hours by 2030, according to a report on Scribd.
Meanwhile, the International Energy Agency (IEA) highlights a broader global trend, predicting that worldwide data center demand will more than double by 2030.
Texas sits at the center of it.
According to E&E News, the state’s grid operator, ERCOT, has fielded requests for 225 gigawatts of new large-load connections by 2030.
Related: TSMC executive drops blunt message on AI chip’s next frontier
Waiting in that line is the problem data center developers want to skip.
Research firm Cleanview counted 46 U.S. projects planning about 56 gigawatts of behind-the-meter capacity, Power Engineering reported, representing about 30% of the planned national buildout.
Consultancy firm Grid Strategies estimates data centers will drive about 55% of U.S. electricity demand growth over the next five years.
The EIA forecasts that the period spanning through 2026 and 2027 will culminate in the strongest consecutive four-year growth period in U.S. electricity demand since 2000.
How Cummins makes money from the data center boom
Cummins runs four segments, and the one investors now care about most is Power Systems, the unit that builds large engines and generators.
That business segment is why management raised full-year guidance in May, lifting expected 2026 revenue growth to a range of 8% to 11% and pointing to double-digit growth in power generation, TIKR reported.
The company is also developing a new 4-megawatt natural gas engine aimed squarely at data centers.
More AI and power stocks:
- GE Vernova CEO sends rattling message on data centers
- Major gas, energy company files for bankruptcy
- Duke CEO offers sobering prediction on data center electricity demand
The payoff is already visible.
Power Systems delivered record first-quarter revenue of $1.96 billion, up 19% on data center power demand, at a segment-high 29.5% margin, Cummins reported.
Trucks, on the other hand, did not perform so well: Engine revenue fell 4% and its margin compressed to about 10% on weak North American demand.
What has to go right for the bull case
- Cummins’Power Systems segment keeps converting AI demand into firm, multi-year orders like the Circe deal.
- The new 4-megawatt gas engine ships on schedule and wins repeat customers.
- North American truck demand stabilizes, so that Cummins’ engine business contributes to growth instead of weighing on it.
- Margins hold as Cummins scales generator output.
Wall Street is split on how high Cummins’ stock can go
UBS reiterated a Buy rating and an $850 target after the Circe deal, with analyst Steven Fisher expecting earnings to rise from about $30 a share in 2026 toward $41 by 2028.
Other analysts are cautious.
Bernstein holds a Market Perform with a $700 target, and one widely cited model from Simply Wall St puts fair value near $643, below the current price.
The risks remain real:
Cummins still earns most of its profit from trucks, insiders have been selling, and the stock’s valuation already prices in much of Cummins’ expected AI power growth.
Here’s the key takeaway:
The Circe deal is bringing real revenue and serves as a genuine pivot towards AI power infrastructure, but at the current CMI stock price, the AI-power theory is already heavily accounted for.
Hence, it makes sense to watch out for more Power System orders and increased truck demand before chasing CMI stock.
Related: Elon Musk has a radical fix for an AI-dominated economy
