Cummins Sees Truck Demand Rebound, Data-Center Power Orders Stretching to 2028

Key Points

• North American truck demand is recovering after a soft year, supported by improved fleet profitability and greater clarity around 2027 emissions rules. Cummins expects continued demand into 2026, though regulatory-related costs may moderate prebuy activity.
• Data-center power demand remains exceptionally strong. Cummins is taking orders for its QSK95 generator through the second half of 2028, faces supply constraints for larger engines, and remains confident in its goal of exceeding $9 billion in data-center exposure by 2030.
• Cummins plans to expand prime-power capacity, develop natural-gas generation and battery-storage offerings, and improve losses at its Accelera business while continuing investments in data centers, emissions technology, dividends and share repurchases.

Cummins NYSE: CMI executives said demand in North American trucking and data-center power markets remains strong, while recent regulatory clarity around 2027 emissions rules has reduced uncertainty for fleet customers.

Speaking at Morgan Stanley’s Laguna Conference, James Hopkins, Cummins’ vice president of financial planning, capital management and investor relations, said the North American truck market has been soft over the past year but has improved during the last six months. He attributed the improvement partly to stronger fleet profitability, which tends to support vehicle purchasing.

EPA flexibility could moderate, not eliminate, prebuy activity

Hopkins said the Environmental Protection Agency’s semi-final rule has clarified that the industry will have flexibility in 2027. Manufacturers can sell historical powertrains with a non-conforming penalty, or NCP, or offer new powertrains designed to meet the 35 mg/bhp-hr NOx requirement.

That flexibility has eased concerns that customers would have only one option for 2027, he said. However, he added that end-user costs are expected to rise regardless of whether customers choose historical products with NCPs or new powertrains.

“Demand remains high in the second half of this year,” Hopkins said, adding that the higher 2027 cost structure supports continued demand into the second half of 2026. He said demand may be somewhat lower than some forecasts made several months earlier, but noted the industry is already capacity constrained.

Customers value uptime and are generally cautious about potential quality issues associated with newly introduced products, Hopkins said. The availability of established products may encourage fleets to make more purchases than they otherwise would have, while limited introductions of new technology can help customers become familiar with it before a full transition.

Pricing and margins on new engine technology

Hopkins said Cummins expects to fully pass NCPs through the market. While average selling prices for historical products would rise, profit dollars would remain flat because the company would offset the penalties through pricing. Profit margins expressed as a percentage would decline due to the arithmetic effect of the higher selling price, he said.

For new engines, Hopkins said Cummins has a multidecade record of increasing prices and expanding margins when introducing more complex emissions technology. He expects the company to obtain incremental price and margin from its upcoming products, though warranty accruals may rise modestly at launch.

Cummins plans to introduce new powertrains at low volumes in early 2027, gathering operational and quality data before transitioning more fully to the new technology. Hopkins said the new products are expected to improve diesel and diesel exhaust fluid economy, driver experience and end-user profitability.

The company also expects its new products to be available in more chassis across original equipment manufacturers than its current portfolio. Hopkins said Cummins holds more than nine out of 10 medium-duty engine positions in North America and about four out of 10 heavy-duty engine positions.

Data-center power demand remains firm

Nick Arens, Cummins’ executive director of investor relations, said demand for diesel standby power from data-center customers remains “extremely strong.” Cummins recently renewed a multiyear agreement with a large hyperscale customer, he said.

Arens said Cummins is taking orders for its QSK95 generator solution into the second half of 2028. Customers unable to obtain the 95-liter product are selecting smaller 78-liter, 60-liter and 50-liter options, reflecting supply constraints for the larger engine through the second half of 2028.

While competition is increasing, Arens said Cummins benefits from long-standing customer relationships, global distribution and service capabilities, and its high-horsepower diesel technology. He said the company has generated mid- to high-single-digit pricing in recent years, although the pace of additional pricing gains is expected to moderate. Cummins still expects favorable price-cost dynamics through the end of the decade.

The company reaffirmed confidence in its target for more than $9 billion of data-center-related exposure by 2030, which Arens said is largely supported by diesel standby demand.

Prime power, battery storage and capital allocation

Cummins is also expanding capacity for prime-power applications, with executives saying the company is deploying capital now and expects initial incremental capacity to come online next year. Arens said Cummins expects to have 55 gigawatts of high-horsepower engine capacity by 2030 across mining, standby generation and prime-power uses.

The company’s 130-liter natural-gas prime-power product is expected to reach key development milestones in the second half of next year. Cummins expects limited prototype production in the second half of 2028, followed by a ramp in 2029 and 2030. Arens said diesel standby and gas prime power have comparable first-fit margin profiles, but gas prime power could generate a stronger aftermarket opportunity as its installed base grows.

Cummins also discussed a battery energy storage system application designed to help a data center maintain a more consistent load on the grid. Arens said that project is expected to contribute revenue in the low hundreds of millions of dollars over the next several years, though it will dilute overall margins.

Hopkins said Cummins has reduced losses at its Accelera business by lowering research and development spending and exiting the electrolyzer business. He said the company will continue to size Accelera investment around technology adoption while retaining core capabilities in batteries, electric systems and other technologies. Cummins also plans to continue investing in data centers, emissions-related products and aftermarket opportunities, while maintaining its record of dividend increases and share repurchases.

About Cummins (NYSE:CMI)

Cummins Inc is a global power and energy technology company headquartered in Columbus, Indiana. Founded in 1919, the company designs, manufactures, sells and services engines, powertrains and related technologies for commercial vehicles, industrial equipment, mining, construction, agriculture, marine and other applications.

Cummins' products and services include diesel and natural-gas engines, hybrid powertrains, fuel systems, filtration and emission-control technologies, turbochargers, generators and power-generation systems.

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