Caterpillar's Dip May Be an Opportunity for Investors Amid AI-Driven Growth

Caterpillar's recent stock dip may be an opportunity for investors to get in on the action, despite its impressive rally over the past year. The company's Q2 revenue reached a record $20.5 billion, up 24% from last year, with adjusted earnings per share (EPS) rising 73% to $8.17.

The dip in stock price is largely due to a recent high of around $1,062 in June, but the current price of around $822 still represents a doubling of the stock's value over the past year. CEO Joe Creed attributed the strong order rates and growing backlog to broadening momentum across the business.

One key area driving Caterpillar's growth is its involvement in the AI buildout, particularly in power generation sales, which rose 17% to $8.24 billion in Q2. The company's role in providing backup generation and prime power using natural-gas engines and turbines has become increasingly important for data centers, which rely on reliable electricity.

Caterpillar's backlog extends far beyond 2026, giving the current growth cycle unusual visibility. With a record $72 billion of orders and a 92% year-over-year increase, management expects 59% of that backlog to convert within the next 12 months.