NEW YORK, July 30, 2026, 12:13 p.m. EDT
- Caterpillar climbed 3.1% to $807.25 during late-morning trade, recovering after a 6.9% decline on Wednesday.
- Baird downgraded Caterpillar to Neutral and reduced its price target to $900 from $1,200.
- Approximately 78% of external sales growth in Power & Energy for the first quarter came from power generation.
Caterpillar stock climbed 3.1% to $807.25 late Thursday morning. The increase came after a 6.9% decline to $782.72 on Wednesday, triggered by a downgrade from Baird. U.S. markets remained open.
The stock’s bounce kept it 4.0% under its Tuesday closing level. Valuation remains the main concern rather than present demand. According to Barron’s, the stock continues to trade at roughly 30 times projected earnings, about twice its typical average.
The adjustment to price and target was significant:
| Reference point | Price | Change or implied return |
|---|---|---|
| Tuesday close | $840.85 | — |
| Wednesday close | $782.72 | -6.9% |
| Thursday session high | $807.25 | +3.1% |
| Baird new target | $900 | +11.5% from Thursday |
| Baird old target | $1,200 | +48.7% from Thursday |
The table reflects Thursday’s intraday prices and Wednesday’s reported targets.
The adjusted target continues to signal an 11.5% potential gain. However, it cuts about three-quarters of the upside Baird previously suggested. This reflects a multiple reset rather than a prediction of collapse.
Operating figures highlight the issue. Power generation accounted for roughly 16% of the group’s revenue in the first quarter. This segment drove 26% of Caterpillar’s annual sales growth. The company attributed the rise primarily to demand from data-center applications.
| Power & Energy external sales by application | Q1 2026 sales | Year-on-year increase | Portion of external sales | Portion of external-sales increase |
|---|---|---|---|---|
| Power generation | $2.817 billion | 41% | 49.3% | 77.5% |
| Oil and gas | $1.423 billion | 13% | 24.9% | 15.6% |
| Industrial | $1.473 billion | 5% | 25.8% | 6.9% |
| Total external sales | $5.713 billion | 23% | 100% | 100% |
Caterpillar’s disclosed application sales served as the basis for share and growth contribution calculations.
Within Power & Energy, a single business was responsible for close to 80% of growth in external sales. This means project timing carries greater significance than the segment’s present contribution to revenue indicates.
Baird analyst Mig Dobre noted the challenges are not limited to New York. “This raises costs, adds new development approval hurdles, limits site availability, and likely slows future investment,” he wrote. Barron’s
New York’s July 14 directive puts on hold state permit applications that are not yet complete. The order applies to data centers with a consumption capability of at least 50 megawatts. In May, requests amounting to almost 12 gigawatts of load were pending.
The order introduces a partial offset as well. Regulators might mandate dedicated power generation or storage for approved locations. This may increase the necessary onsite equipment for each project, even as the pace of approvals decelerates. Caterpillar provides engines and turbines used for both main and backup power.
Caterpillar’s valuation is currently positioned between that of conventional machinery firms and dedicated data-center infrastructure providers:
| Company | Relevant exposure | Price | Day | Trailing P/E |
|---|---|---|---|---|
| Caterpillar NYSE:CAT | Machinery, data-center power | $807.25 | +3.1% | 40.2x |
| Deere & Co. NYSE:DE | Heavy machinery | $597.34 | -2.2% | 33.9x |
| Cummins Inc. NYSE:CMI | Engines, power systems | $632.85 | +4.4% | 32.9x |
| Vertiv Holdings NYSE:VRT | Data-center power, cooling | $227.22 | +1.9% | 51.4x |
As of approximately 11:58 a.m. EDT, prices and trailing multiples were up to date.
CAT trades at a multiple 19% higher than Deere and 22% higher than Cummins, yet stays roughly 22% below Vertiv. Markets continue to position Caterpillar valuation between machinery and dedicated AI infrastructure companies.
Caterpillar continues to boost supply. The company aims to more than double its power-generation sales by 2030 from 2024 levels. Large-engine capacity is set to double, and gas-turbine capacity is projected to increase 2.5 times.
The supply plan serves as the key constraint. Baird anticipates robust order volumes up to 2026, followed by reduced growth rates in 2027 and 2028. The firm also warned about a potential excess of power equipment later in this cycle.
The upcoming test is set for August 4. Analysts’ early consensus projections see earnings at $6.22 per share with revenue at $19.3 billion. Investor’s Business Daily noted this would mark a 17% revenue increase. Caterpillar is scheduled to release results ahead of the U.S. market open.
Monitoring increases in backlog and the schedule for deliveries remains important for investors. In the first quarter, the backlog rose to $62.7 billion, which is close to 90% of annualized Q1 revenue. CEO Joe Creed stated, “A record backlog provides a strong foundation for continued positive momentum.” Reuters
Risks: Broader restrictions on permits may reduce 2027 orders with additional capacity coming online. Rules for on-site power could help maintain equipment content at sites with permits. Tariffs continue to be an independent factor weighing on margins.
Thursday’s recovery leaves the valuation argument unresolved. The market movement points to a surprise in timing rather than indicating a drop in demand. That difference will be clarified on August 4.
Related articles: NYSE:CAT
