Cummins reported its second quarter 2026 on August 4, and the story of the quarter is a segment reshuffle rather than a cyclical beat. Power generation revenue grew 19% in the quarter. Segment EBITDA reached $552 million. That is a 24.5% margin, as data center demand pulled through both North America and the rest of the world. The Engine segment, which has anchored the company for decades, grew only 6%. Its margin fell to 12.5% of sales from 13.8% a year earlier. The company is, in plain terms, becoming a power business wearing an engine-company valuation.
The investment debate is what that mix shift is worth. Data center power demand is real and still expanding, and Cummins' genset (engine-driven generator set) positions in North America and Asia put it near the front of the line. But the quarter also exposed the cost of the transition: corporate EBITDA margin came in at 17.5% of sales versus 18.4% a year earlier. Adjusted EBITDA of $1.65 billion landed below the roughly $1.7 billion Street was targeting. Record revenue of $9.5 billion exceeded expectations. The margin compression is driven by tariffs, record-year incentive compensation, and the drag of the Accelera zero-emissions unit, which still carries a $69 million quarterly loss.
What the market is pricing is a multiple of 16.3x forward earnings on a stock at $560.75. That price sits meaningfully below its 52-week high of $737.76 set earlier this year. The stock fell back after the print, and that reaction tells you investors are not fully sold on the data center premium justifying a richer valuation. The falsifiable clock is the third quarter: if Power Systems growth holds near double digits and engine margins stabilize, the case for the power premium strengthens. If data center order flow decelerates or tariff costs keep eroding margin, the franchise looks like it is paying for a story that has not yet cleared the old engine economics.