TLDR
- CAT stock trades near $811.58, about 24% below its June record high.
- Caterpillar’s backlog hit a record $72 billion in Q2, up 92% year-over-year.
- Power & Energy sales rose 17% to $8.2 billion, with power generation sales up 29%.
- Wall Street rates CAT a Moderate Buy with an average price target of $1,009.71, implying 23% upside.
- Caterpillar raised its quarterly dividend 8% to $1.63, marking 32 straight years of increases.
Caterpillar (CAT) stock sits at $811.58, down roughly 24% from its June record high. That pullback might be a decent entry point for investors willing to look past the recent dip.
The reason comes down to demand. Caterpillar closed Q2 with a record $72 billion backlog, up 92% from a year earlier. That’s not a small bump.
CEO Joe Creed pointed to “broadening momentum” across the company’s three main segments. Investors seem split on whether that momentum justifies the current price.
Power Demand Is Reshaping the Business
AI data centers need more than chips. They need roads, water, grid connections, and often on-site power generation because utility hookups can’t keep pace.
Caterpillar sells both the construction gear and the engines and generators that go with it. Power & Energy sales climbed 17% to $8.2 billion in Q2, and power generation sales alone jumped 29%.
The company expects power generation sales to triple by 2030 compared to 2024 levels. Some customers are already placing orders that stretch out to 2030.
One deal shows the scale involved. American Intelligence & Power ordered 2 gigawatts of Caterpillar generators for a hyperscale campus in West Virginia, with deliveries running through August 2027.
That’s a multi-year commitment, not a single quarter’s order. Electrification, reshoring, and mining projects are adding to the pull on Caterpillar’s equipment too.
Autonomy and Services Add Another Layer
Caterpillar is also leaning into automation. It recently put a remotely operated dozer to work at an Arizona landfill, letting an operator run the machine from a control station away from the dust and heat.
WM is testing an autonomous compactor with Caterpillar after piloting that remote dozer. At Luck Stone’s Bull Run quarry, autonomous trucks have hauled more than 3.5 million tons since November 2024, and the system is now expanding to two more Virginia sites.
Caterpillar hasn’t attached a dollar figure to these autonomy projects yet. That leaves investors waiting for proof that the technology translates into real service revenue.
Services revenue is already a meaningful piece of the business. Caterpillar pulled in $24 billion from services last year, backed by more than 1.6 million connected assets.
On valuation, 2026 EPS estimates of $27.19 put CAT at roughly a 30x forward P/E. That’s well above the mid-to-high-teens multiples Caterpillar traded at before the AI infrastructure story took hold.
Management is also flagging about $2.2 billion in tariff expense for 2026. That’s a real cost working against margins even as demand grows.
Caterpillar backed up its cash position with an 8% dividend hike in June, bringing the quarterly payout to $1.63. That marks 32 consecutive years of increases, though the yield is a modest 0.8%.
The company also repurchased $1.5 billion of stock in Q2. Wall Street currently rates CAT a Moderate Buy, split between eight Buy and eight Hold ratings.
The average price target sits at $1,009.71, implying about 23% upside from current levels. At $811.58, shares trade 76% above the $461.18 GF Value estimate, a steep gap for progress that hasn’t yet been quantified in dollar terms.
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