Caterpillar's Record Quarter Fails to Hold as Market Wors Concerns

Caterpillar (CAT) posted its first $20 billion quarter in its century-long history, beating estimates by 32% and sending the stock up almost 6%. However, this gain was short-lived as the stock fell back down to $811.02 within three weeks.

The company's second-quarter results were strong, with sales rising 24% to $20.5 billion and adjusted profit per share jumping 73% to $8.17. Management raised full-year guidance to mid- to high-teens sales growth, citing demand for the large engines and turbines that keep AI data centers running.

The market's reaction was swift, but it didn't hold up as investors began to worry about the potential slowdown in hyperscaler spending growth and policy pushback against the buildout. Baird cut CAT to Neutral and slashed its target to $900 from $1,200, warning that data-center construction restrictions could sap demand for Caterpillar's products.