Much of the hype around AI seems to be directed at humanoid robots and augmented reality glasses, but some of the less Jetson-esque applications are breaking ground … literally. Caterpillar has started using AI to automate its mining and construction equipment. On Wednesday, the company demoed a new “Cat” excavator that taps Nvidia’s physical AI platform. Caterpillar’s new AI-powered lineup also includes loaders, dozers and off-road hauling trucks, and it’s working with Nvidia to create construction site ...

Jamie McCarthy / Getty Images Microsoft (NASDAQ:MSFT) founder Bill gates is best-known for his founding of the most valuable company in the world (on multiple occasions, just not now). And rightfully so. That said, over the years, Bill Gates has adjusted his portfolio holdings, choosing to divest in a range of companies via his own personal portfolio but also via his charitable organizations and other investment funds. One could argue that he would have been much better off just staying highly concentrate ...

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President Donald Trump pressured farm-equipment manufacturers to drop prices for tractors as he announced $12 billion in farmer relief https://t.co/AOCRAo73bA ...

Core Insights - Deere Company's shares fell by 5.7% following a 14% year-over-year decline in fourth-quarter fiscal 2025 earnings, attributed to increased production costs and tariff impacts, with earnings missing the Zacks Consensus Estimate by 0.8% [1] Financial Performance - Net sales from equipment operations increased by 14% year over year, exceeding the Zacks Consensus Estimate by 5.9%, but gross profit decreased by 2% due to a 21% rise in quarterly cost of sales [4] - Segment-wise performance showed a 10% increase in sales from the Production & Precision Agriculture unit, a 7% increase from the Small Agriculture & Turf unit, a 27% surge in Construction & Forestry sales, and a 2% rise in revenues from the Financial Services division [5] - Cash flow from operating activities was reported at $7.46 billion for fiscal 2025, down from $9.23 billion the previous year [5] - For fiscal 2026, the company anticipates net income in the range of $4.00-$4.75 billion, indicating a significant decline from the reported net income of $5.03 billion in fiscal 2025 [6] Industry Context - The U.S. agricultural sector has been facing challenges over the past few years, with conditions worsening since April 2025, leading to weak demand for large agricultural equipment and impacting revenue prospects for manufacturers like Deere [2] - ETF investors with significant allocations to funds holding Deere may need to reassess their portfolios to mitigate potential losses if the sector's demand continues to decline [2] ETF Insights - iShares MSCI Agriculture Producers ETF (VEGI) has assets of $85.7 million, with Deere holding a 25.5% weightage, and the fund has gained 11% year to date [7] - VanEck Agribusiness ETF (MOO) has assets of $578.8 million, with Deere at 8.15% weightage, and the fund has increased by 12.8% year to date [8] - Strive Natural Resources and Security ETF (FTWO) has assets of $53.2 million, with Deere at 8.32% weightage, and the fund has surged 38.7% year to date [9] - First Trust Indxx Global Agriculture ETF (FTAG) has assets of $6.2 million, with Deere at 10.01% weightage, and the fund has risen 12.9% year to date [11] - Global X AgTech & Food Innovation ETF (KROP) has assets of $6.30 million, with Deere at 11.84% weightage, and the fund has gained 8.2% year to date [12][13]

Group 1: Market Sentiment and Trends - Stocks are gaining momentum ahead of Thanksgiving, with bullish bets for 2026 increasing [1][2] - Kevin Hassett is emerging as the front-runner for the next Fed Chair, contributing to market optimism [16][19] - Investors are shifting towards more defensive corners of the equity markets amid ongoing competition [2] Group 2: Company Earnings and Performance - Deere's fiscal outlook for 2025 fell short of expectations, leading to a 4% drop in shares [3][11] - The company expects net income to decline over 10% next year, indicating a prolonged downturn in the North American agricultural sector [12] - NVIDIA shares have seen a significant decline of over 14% this month, but are experiencing a slight rebound [4][55] Group 3: Competitive Landscape in Technology - NVIDIA faces new competition from Google's TPU chips, raising concerns about its market share and investor sentiment [4][6] - Despite competition, many analysts still believe NVIDIA will remain a dominant player in the AI market [7][8] - Companies connected to Alphabet, like Broadcom, are performing well, while those tied to NVIDIA are struggling [9][10] Group 4: Economic Indicators and Consumer Behavior - The U.S. economy is expected to see moderate growth, with fiscal stimulus and a neutral Fed interest rate outlook [45] - Consumer confidence has dropped significantly, with 42 million Americans on food stamps, indicating a bifurcated consumer landscape [46][48] - Economic growth is primarily driven by middle and upper-income consumers, while lower-income consumers continue to face challenges [49][50] Group 5: Regulatory and Policy Implications - The potential nomination of Kevin Hassett as Fed Chair has raised questions about the independence of the Fed, but market reactions have been positive [18][22] - The U.S. has negotiated significant Medicare drug price cuts, which could impact pharmaceutical companies and overall healthcare costs [32] - The U.K. budget unveiling faced a premature release of information, revealing a fiscal cushion increase driven by new taxes [34][36]

Core Viewpoint - Deere & Co has indicated a significant increase in tariff impacts for 2026, forecasting annual profits below market expectations due to weaker margins on large tractors, resulting in a 5% drop in share prices [1] Financial Forecast - The company anticipates a pre-tax tariff impact of approximately $1.2 billion in fiscal 2026, up from nearly $600 million in 2025 [2] - Annual net income for fiscal 2026 is projected to be between $4.00 billion and $4.75 billion, which is below analysts' estimates of $5.33 billion [3] Quarterly Performance - For the latest quarter, Deere reported a net income of $1.06 billion, or $3.93 per share, down from $1.24 billion, or $4.55 per share, in the same period last year [4] - The fourth-quarter revenue increased by 11% to approximately $12.4 billion, exceeding estimates of $9.85 billion [4] Market Conditions - Lower crop prices and rising production costs have led farmers to postpone significant purchases, opting instead for rentals or pre-owned equipment [2] - The company is exploring production shifts, higher pricing, and expanding its used equipment portfolio to mitigate weak demand [3]

Core Viewpoint - Deere & Co.'s first outlook for the upcoming fiscal year is below expectations, with net income projected between $4 billion and $4.75 billion, falling short of the average estimate of $5.31 billion [1] Group 1: Financial Performance - The projected net income for Deere & Co. is between $4 billion and $4.75 billion for the fiscal year starting November 1 [1] - This outlook has led to a decline in shares by as much as 4.6% before regular trading commenced in New York [1] Group 2: Market Conditions - The weak outlook is attributed to challenges faced by farmers, including low crop prices and the impact of tariff policies [2] - Despite a recent trade deal between the US and China aimed at increasing American crop shipments to Asia, uncertainty remains regarding its effectiveness in revitalizing the US farm economy [2] Group 3: Industry Sentiment - Rival manufacturer CNH Industrial NV has expressed concerns about the ambiguity of the trade deal, which contributes to uncertainty in the sector regarding farmer spending [3] - There is a belief within the industry that the resumption of US crop imports by China and an upcoming aid package for American farmers may provide support in 2026 [3]

Core Insights - The tractor manufacturing industry, particularly Deere, is facing challenges due to elevated costs and low crop prices, leading to production cuts and layoffs [3] - Deere's smart industrial strategy, launched in 2020, aims to integrate advanced technologies and has started to show improvements in income and margins despite adverse conditions [5] - For fiscal year 2025, Deere reported a 12% decline in worldwide net sales to $45.7 billion and a 29% drop in net income to $5 billion, impacted by tariffs and a sluggish farm economy [6] Financial Performance - In Q4 of fiscal year 2025, Deere reported net sales of $12.3 billion, an 11% increase year-over-year, driven by a 10% increase in production and precision agriculture and a 27% increase in construction and forestry [9] - Despite the sales increase in Q4, net income was nearly $1.1 billion, down 14% from the previous year due to higher production costs and tariffs [9] Future Outlook - Deere's CEO expressed optimism that fiscal year 2026 will mark the bottom of the current down cycle in the tractor market, with a forecasted sales decline of 15% to 20% for large agriculture products in the U.S. and Canada [8] - Construction and forestry sales are expected to either grow by 5% or remain flat in the same region [8]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were down 5% at $4.4 billion, with global ag segment sales down 11% and North America down 29% [9][10] - Industrial adjusted EBIT was $104 million, down 69% year over year, reflecting lower industry demands and tariffs [10][16] - Adjusted net income decreased to $109 million, with adjusted EPS for the quarter at $0.08, down from $0.24 [10][16] Business Line Data and Key Metrics Changes - Agriculture Q3 net sales were just under $3 billion, down 10% year over year, primarily due to a 29% decrease in North America [17] - Construction third quarter net sales were $739 million, up 8% year over year, driven by higher sales in North America and EMEA [20] - Adjusted gross margin for agriculture was 20.6%, down from 22.7% in Q3 2024, affected by lower volumes and tariff costs [17][18] Market Data and Key Metrics Changes - North America experienced a 29% decline in agriculture sales, while EMEA saw a 16% increase, particularly in tractors [9][17] - Conditions in South America remain challenging, with geopolitical and market circumstances impacting farmers [5][6] - The overall industry retail demand is expected to be down around 10% from 2024, with construction volumes expected to decline about 5% [27][28] Company Strategy and Development Direction - The company is focused on five strategic pillars: expanding product leadership, advancing iron and tech integration, driving commercial excellence, operational excellence, and quality as a mindset [10][18] - The company is transforming its global supply chain and dealer network to mitigate risks from market volatility [4][6] - Upcoming product launches at Agritechnica are aimed at filling market gaps and gaining ground in EMEA [9][11] Management's Comments on Operating Environment and Future Outlook - Management noted that market fundamentals remain uncertain and challenging for farmers, particularly in North America and South America [5][6] - The company expects to navigate near-term challenges while investing in business improvements and preparing for future product launches [6][7] - The outlook for 2026 anticipates flat to slightly down global industry retail demand compared to 2025 [31][32] Other Important Information - The company has reduced quality costs by over $60 million year to date, reflecting improvements in operational efficiency [15] - The company repurchased $50 million worth of stock at an average price of $11.25 per share during Q3 [24] - The company is maintaining a focus on margin improvement initiatives despite the current trade environment [33] Q&A Session Summary Question: Can you elaborate on the decremental margin on the volume mix? - The decremental margin was primarily driven by the 29% decline in North America, with EMEA up 16% [35] Question: What is the impact of SG&A on the margin? - SG&A increased due to higher variable compensation accruals, contributing to the margin decline [36] Question: Can you unpack the product cost changes? - Product costs were favorable by $33 million year over year, despite $44 million in tariff costs [38] Question: How much of the tariff cost is tied to different tariff categories? - About 20% of the tariff costs are from Section 232, with no reliance on potential relief from the Supreme Court [43] Question: What gives confidence in achieving desired dealer levels in three to four months? - The company expects to achieve a $1 billion inventory reduction by year-end, allowing for increased production in 2026 [41]