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Caterpillar Inc. (NYSE:CAT) is charging into the AI era — and Wall Street is taking notice. As CEO Joe Creed told investors, “We’re definitely really excited about the Prime Power opportunity with data centers and the demand they’re putting on the grid,” signaling a strategic evolution from traditional heavy equipment toward powering digital infrastructure.
The company’s growing focus on data centers, power generation, and industrial efficiency marks what analysts see as the next major chapter in its growth story.
Bank of America Securities analyst Michael Feniger reiterated a Buy rating on Caterpillar and raised his price forecast to $650 from $594, emphasizing that the company’s “through-cycle EPS power” is trending higher.
Related: Caterpillar CEO Says Team’s Discipline Will Drive Growth Even With Higher Tariffs
Caterpillar posted third-quarter adjusted EPS of $4.95, topping expectations of $4.51, while retail sales rose 12% and backlog climbed to a record $39.8 billion.
Feniger attributed this momentum to robust power generation and oil and gas performance — with those segments up 31% and 20% year-over-year, respectively — and improving pricing dynamics.
The analyst stated that the convergence of power generation, oil and gas, and AI-driven data center demand positions Caterpillar as a key player in the evolving industrial and energy landscape.
He based his $650 price objective on 27x 2026 EPS, above the company’s long-term range, reflecting confidence in Caterpillar’s expanding margins, resilient portfolio, and structural growth catalysts.
While Feniger acknowledged risks from tariffs, inventory normalization, and dealer destocking, he highlighted Caterpillar’s operational discipline and exposure to infrastructure, energy, and technology demand as reasons to stay bullish.
He added that upcoming commentary at the company’s Investor Day could reveal “a higher peak EPS in play” — underscoring that, for Caterpillar, the real power story may just be getting started.
Price Action: CAT shares were trading higher by 0.13% to $586.27 as of last check Thursday.
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Posted In: CAT
