Caterpillar's Next Big Move Has Nothing To Do With Bulldozers

Core Viewpoint - Caterpillar Inc. is transitioning towards AI and digital infrastructure, particularly focusing on data centers and power generation, which is attracting attention from Wall Street [1][2]. Group 1: Company Performance - Caterpillar reported a third-quarter adjusted EPS of $4.95, exceeding expectations of $4.51, with retail sales increasing by 12% and backlog reaching a record $39.8 billion [3]. - The strong performance in power generation and oil and gas segments contributed significantly, with year-over-year increases of 31% and 20%, respectively [3]. Group 2: Analyst Insights - Bank of America Securities analyst Michael Feniger maintained a Buy rating on Caterpillar, raising the price target to $650 from $594, citing the company's improving EPS power [2][4]. - The convergence of power generation, oil and gas, and AI-driven data center demand positions Caterpillar favorably in the industrial and energy sectors, with a price objective based on 27x 2026 EPS [4]. Group 3: Future Outlook - Despite acknowledging risks such as tariffs and inventory normalization, the analyst remains optimistic about Caterpillar's operational discipline and exposure to infrastructure and technology demand [5]. - Upcoming commentary at the company's Investor Day may indicate a potential for higher peak EPS, suggesting that Caterpillar's growth story is just beginning [5].