TLDR
- Caterpillar (CAT) stock fell as much as 10% in premarket trading Thursday despite a third-quarter earnings beat.
- Q3 earnings per share came in at $7.20 on sales of $20.7 billion, ahead of Wall Street’s $7.06 estimate.
- The company only maintained its full-year guidance, which left investors unimpressed.
- Backlog hit a record $72.1 billion at the end of the second quarter, up $34.6 billion from a year ago.
- Worries over debt-driven AI spending weighed on AI-linked stocks after results from big tech firms.
Caterpillar (CAT) stock fell as much as 10% in premarket trading on Thursday, even though the company beat Wall Street’s third-quarter earnings estimates. Reports put the drop between 7% and 10% early in the session. Before the report, the stock had entered the week below $690.
The heavy machinery maker posted earnings per share of $7.20 on sales of $20.7 billion. Analysts had expected $7.06 per share on $20.8 billion in sales. A year ago, Caterpillar earned $4.95 per share on $17.6 billion.
Investing.com reported adjusted earnings of $7.20 against projections of $7.10. Revenue rose 17% to $20.68 billion. Operating profit margin climbed to 20.4% from 17.3% a year earlier.
CATERPILLAR $CAT Q3’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $20.7B (Est. $20.54B) 🟢; +17% YoY
🔹 Adj. EPS: $7.20 (Est. $7.08) 🟢; +45% YoY
🔹 Adj. Operating Margin: 20.6%; +310 bps YoY
🔹 Enterprise Operating Cash Flow: $4.4BSegment Net Revenue:
🔹 Power & Energy: $8.8B; +18% YoY… pic.twitter.com/c9PGXJ7SoT— Wall St Engine (@wallstengine) October 29, 2026
So why the sell-off? Caterpillar only maintained its full-year financial guidance. For a stock that has been priced for growth, a beat with no raise was not enough.
AI-linked stocks were also under pressure before the open. Results from several megacap tech firms revived worries about debt-fueled spending on data centers and chips. Caterpillar’s power business sits right in the middle of that trade.
Power Business Drives Growth
Revenue at the machinery, power and energy unit rose 18% from a year ago to $19.65 billion. That figure was roughly in line with Bloomberg consensus. Demand for power-generation equipment tied to AI data centers is a big part of the story.
In the second quarter, sales in the power and energy segment were $8.2 billion, up 17% year over year. Investors had been watching this line closely. What management said about it was expected to shape how the stock traded after the report.
Backlog is another number to know. It reached a record $72.1 billion at the end of the second quarter. That is up $34.6 billion from the same point last year.
“Our third-quarter results reflect the durability of our end markets, with strong order rates and a record backlog,” said Chairman and CEO Joe Creed. It is a confident line, though the market did not buy it on Thursday morning.
Raymond James analyst Tim Thein flagged some noise in the AI and distributed power space. He pointed to political and regulatory scrutiny and credit concerns in certain hyperscaler debt. Even so, he said dealer feedback shows order activity remains strong, especially for large gas engines.
Valuation in Focus
Valuation has been a sticking point. Caterpillar traded at about 23 times expected earnings heading into the report, up from about 17 times a year ago. In late June, the multiple was near 39 times, when the stock was above $1,000.
Thein rates the stock Market Perform, which is essentially a Hold. He does not have a price target.
Higher interest rates are another factor. They can raise financing costs for large construction projects. That adds one more item to management’s list on Thursday.
Before the report, the stock was up 25% year to date through midday Wednesday. That was about 12 percentage points ahead of the S&P 500.
Thursday’s premarket drop was steep, with one report putting the decline at more than 10%. Caterpillar has not changed its full-year guidance, and the stock was falling as early trading got under way.
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