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    AI Data Center Power Push and Tech Shift Could Be A Game Changer For Caterpillar (CAT)

    Simply Wall St·12/25/2025 16:16:10
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    • In recent days, Caterpillar has drawn heightened attention as analysts highlighted its expanding role in power generation for AI data centers, reaffirmed positive ratings, and the company confirmed it will maintain its quarterly dividend of US$1.51 per share while advancing new technology features across its equipment lineup.
    • At the same time, Caterpillar’s push into autonomous mining, enhanced service commitments, and data center energy-optimization partnerships underscores its shift toward higher-tech, recurring-revenue solutions anchored by a multibillion-dollar order backlog.
    • Next, we’ll examine how Caterpillar’s growing exposure to AI-driven power generation demand could reshape its existing investment narrative and risk balance.

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    Caterpillar Investment Narrative Recap

    To own Caterpillar, you really need to believe its shift from purely heavy machinery to higher tech, services and AI related power solutions can support earnings through economic ups and downs. The latest analyst attention and AI data center narrative reinforce that the key near term catalyst remains power generation demand, while the biggest ongoing risk is still margin pressure from tariffs and potential pricing headwinds, which this news does not materially change.

    Among the recent developments, the Vertiv partnership stands out as most relevant, since it links Caterpillar’s power generation equipment directly to data center energy optimization. That arrangement helps frame how AI driven infrastructure spending could support Caterpillar’s backlog and service revenues, even as investors weigh macro softness in construction and mining and the risk that discounting or tariffs could compress margins over time.

    Yet even with AI and data center momentum, investors should be aware that Caterpillar’s exposure to tariff costs and pricing pressure could...

    Read the full narrative on Caterpillar (it's free!)

    Caterpillar's narrative projects $74.0 billion revenue and $13.5 billion earnings by 2028.

    Uncover how Caterpillar's forecasts yield a $587.67 fair value, in line with its current price.

    Exploring Other Perspectives

    CAT 1-Year Stock Price Chart
    CAT 1-Year Stock Price Chart

    Sixteen fair value estimates from the Simply Wall St Community span roughly US$292 to US$588 per share, underscoring how far apart individual views can be. Against this wide range, Caterpillar’s growing AI linked power generation backlog and ongoing tariff and pricing risks give you plenty of reasons to compare several of these perspectives before deciding how its performance could evolve.

    Explore 16 other fair value estimates on Caterpillar - why the stock might be worth as much as $587.67!

    Build Your Own Caterpillar Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.