Cummins Inc.: A traditional engine maker with new energy - and strong growth potential

Goldman Sachs raised its recommendation to "buy" $CMI and the target price to $431, representing a potential upside of 36%. The reason? Strong performance from its Power Systems division, rising margins, broader demand for generators, and technological alignment with the future of the power industry.

• Margins of 15-20%, historically only 5-10%
• Profitability structured on the basis of differentiated pricing
• Popular large generators outside of data centers (e.g. hospitals, industrial, infrastructure)

• Independence from data center boom = more stable revenue
• Cummins $CMI benefits from overall demand for backup power and decentralization of power

• Proactive response to new EPA 2027 standards = less pressure on traditional engine business

• Sleeper cab inventories down -30% year-over-year = signs of market stabilization
• Potential for cycle turnaround and return of demand

CMI price development:

2025 YTD

-9 %

May 2025

+7 %

Following Goldman Sachs recommendation

+2 %

• Goldman Sachs target price: 431 USD
• Current price (at time of analysis): 316 USD
• Average target price of other analysts: Growth of only 11%
• Most analysts remain conservative: 15 out of 24 recommend holding

• Improvement in engineering - after 3 years, stocks are falling
• Valuations considered reasonable (given the cycle)
• Energy and infrastructure = new pillars of growth for Cummins $CMI

Cummins $CMI isn't just a diesel engine maker - it's a transformative technology company that is building an off-grid energy future today, with strong margin discipline and diversification away from riskier segments.