Just noticed something interesting about Cummins that most people are still sleeping on. The stock's up about 50% in six months, but it's not really about trucks anymore—it's about what's powering the AI boom.

So here's the thing: data centers running all this AI infrastructure need massive amounts of reliable power. When the grid hiccups, they need backup. That's where Cummins comes in with industrial generators. Their power systems segment just became their fastest-growing and most profitable division, and it's not even close.

The numbers tell the story. In Q2 2025, management was talking about $2 billion in annual revenue for data center power. By Q4, they'd basically doubled that projection to $3.5 billion. That's insane growth in just a few quarters. Power systems revenue hit $7.5 billion for the full year with EBITDA margins at 22.7%—that's a 430 basis point jump year-over-year. Distribution side (installation and service) grew 9% to $12.4 billion.

What's wild is the order book. These bookings stretch all the way to 2028. That's visibility most industrial companies dream about. CFO Mark Smith literally called it a "low-risk weighted play on the AI boom," and honestly, the order book backs that up completely.

Now, the traditional engine and components business—still two-thirds of revenue—had a rough year. Truck sales fell 13.6% as the replacement cycle cooled. But management's expecting that to flatten out or grow 5% in 2026 as things stabilize. There was also a $458 million write-down in their electrified systems division after government incentives dried up, which dragged on overall revenue.

Here's why I find this interesting though: even with all that headwind, adjusted EBITDA still grew 9% to $5.8 billion. The margins expanded 170 basis points to 17.4%, almost entirely driven by those higher-margin power system sales. That's the real story—the business is reshaping itself in real time.

The valuation's at 22.5x forward earnings, which actually looks reasonable for something tied to AI infrastructure demand. Plus, this is a century-old industrial company that paid $1 billion in dividends last year and raised the payout for the 16th straight year running. That kind of consistency matters.

Even if data center demand cools down from here, you're looking at a disciplined company with real visibility into future revenue. The AI power bottleneck isn't going away anytime soon.