Caterpillar Crashes Through AI Trade Hurdles with Record Earnings

Caterpillar has emerged as a dominant player in the AI trade, its products crucial to the global infrastructure buildout. The company's AI-enabled power and energy unit is now its biggest source of revenue, having overtaken more traditional segments.

Caterpillar reported a strong earnings beat on Tuesday, with shares spiking 13% before finishing 6% higher. This brought the company's year-to-date stock gain to 53%, making it the best performer in the Dow since 2025 with a 142% surge over that period.

The company's appeal as an AI stock lies not only in its power and energy segment but also in other earnings engines such as construction, mining, and oil and gas. If enthusiasm around AI cools, Caterpillar may be knocked off its perch as a market-crushing stock, but it still has ways to grow.

Wall Street has largely caught on, with 16 buy ratings, 11 holds, and zero sells, while the average 12-month price target sees 14% upside from Tuesday's close.