Al Root
Such is the power of AI. It can turn a century-old maker of back hoes and mining trucks into a hot tech stock.
Caterpillar shares were up 1.7% in midday trading at $640.69, while the S&P 500 and Dow Jones Industrial Average were down 0.2% and 0.6%, respectively.
Current levels put Cat's market value just north of $300 billion. If Cat stock can close around $641, it will be the first close above $300 billion, according to Dow Jones Market Data. Cat stock first closed with a market value above $200 billion on Nov. 6, 2024.
Caterpillar shares are the best-performing stock in the Dow over the past 12 months, up almost 80% through midday trading, according to Dow Jones Market Data.
Expectations for a jump in construction and mining activity might be helping. But make no mistake, AI is at the heart of recent gains.
One of Cat's divisions makes gas turbines for electricity production. That business is booming as power-hungry AI data centers have accelerated demand growth for electricity. That dynamic has also helped shares of power turbine maker GE Vernova quadruple over the past few quarters.
On Tuesday, Citi analyst Kyle Menges raised his Cat price target by $20 to $710 a share, likely giving the stock a little boost.
Recently, he thought Cat's data center sales -- providing primary and backup power AI computing -- would be about $11 billion by 2030. Now, his estimate is $15.5 billion.
Menges rates the shares a Buy and didn't change his rating on Tuesday.
He isn't alone in focusing more on Cat's power business. Many recent price target increases from Wall Street analysts have focused on the sector. In October, JPMorgan analyst Tami Zakaria wrote that AI-related business could be an incremental $10 in earnings per share over the coming three years.
Sales of equipment used in data centers flow into Caterpillar's energy and transportation business, which generated about $28 billion in sales in 2024. That was approximately 44% of Cat's $64 billion in machinery-related sales that year.
Cat management plans to double its power generation sales, which is part of the energy and transportation segment, between 2024 and 203o.
Overall, the average analyst price target on FactSet for Cat stock has gone from about $400 to $623 over the past six months. That $223 is worth more than $100 billion in market value. The highest target prices from Wall Street analysts, including Menges, top $700 a share. Six months ago, the top analyst price target was $500.
It's been quite a ride for investors and analysts, mainly driven by AI.
Just more than half, 52%, of analysts covering Cat stock rate the shares a Buy. The average Buy-rating ratio for stocks in the S&P 500 is roughly 55%.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 13, 2026 11:52 ET (16:52 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
