NEW YORK, April 23, 2026, 13:26 EDT – Arm Holdings and Caterpillar shares posted strong gains Thursday afternoon, rising 5.4% and 4.2% respectively, as market participants broadened their artificial intelligence investment thesis beyond the usual megacap leaders. The move signals a rotation into companies that support the physical and computational backbone of AI data centers.
Arm led the pack among a group of stocks highlighted by Zacks Investment Research, which also included Apple, Nvidia, and Meta Platforms. While Arm surged, Apple shares remained largely flat, and both Nvidia and Meta edged lower. Investor's Business Daily added Arm to its IBD 50 list late Wednesday, and CNBC noted an industrial name breaking out amid the AI wave.
The shift comes as fund managers seek the next AI trade after Nvidia and a handful of platform stocks have driven much of the market's recent gains. Reuters reported Thursday that investors are rotating into technology, industrials, materials, and data-center bets. The Energy Information Administration projected record U.S. power demand in 2026 and 2027, driven by rising electricity consumption from AI and cryptocurrency data centers.
Arm captured attention in March with the launch of its AGI CPU, its first in-house data-center chip and a major step into mass-produced silicon. The processor is designed for “agentic AI” applications that operate with minimal human intervention. Meta is both a customer and co-developer of the chip. Arm CEO Rene Haas has targeted roughly $15 billion in annual revenue from the AGI CPU within five years, according to Reuters.
Caterpillar offers a different angle on AI exposure. In January, the company reported a 23% jump in fourth-quarter sales from its power and energy division. CEO Joe Creed noted that orders for “prime power” systems are climbing as data-center operators seek reliable on-site electricity. First-quarter earnings are scheduled for April 30. Both Wells Fargo and Truist have raised their price targets on Caterpillar, betting on sustained data-center demand.
The ripple effects extend further along the supply chain. On Wednesday, GE Vernova raised its 2026 revenue and margin forecasts after a pickup in data-center and grid orders, a sign that the AI push is boosting not only chipmakers but also power-equipment suppliers.
However, the trade carries risks. Caterpillar warned that tariffs could cost it around $2.6 billion in 2026. Jefferies analyst Stephen Volkmann noted that margin pressure was already eroding gains despite rising sales. Meanwhile, Arm shares trade at roughly 63 times forward earnings, a lofty multiple for a company still establishing its new business model.
Despite these concerns, investors remain bullish. Michael Arone of State Street warned that the bigger risk might be “staying on the sidelines too long.” Shannon Saccocia of Neuberger Berman sees room for the rally to extend beyond the big tech giants. Thursday's trading data suggests that rotation is already underway.
