NEW YORK, Jan 30, 2026, 19:43 EST — After-hours
- Tariffs and margin pressure have returned to the forefront of the CAT debate
- Orders remain buoyed largely by strong data-center power demand
- Traders enter next week focused on margins, pricing, and how backlogs are converting
Caterpillar, the top construction-equipment manufacturer globally, dropped 1.1% to $657.36 on Friday. The company flagged tariff-related costs could hit roughly $2.6 billion in 2026, up from $1.8 billion projected for 2025. This comes as data-center clients increase orders for nonstop “prime power” generators, pushing the power and energy division past construction in sales. Jefferies’ Stephen Volkmann noted that while sales improved, “tariff headwinds” capped margin gains for the quarter. (Reuters)
This matters as Caterpillar has become a popular play on big-ticket industrial demand, even as management warns investors about higher tariffs hitting the cost base. The company is also ramping up spending to meet rising power-generation orders. CEO Joe Creed described 2025 as a record year and said Caterpillar entered 2026 with “strong momentum.” (Caterpillar Investors)
Caterpillar closed out 2025 with a record backlog of $51 billion, marking a 71% jump from the previous year. In its 2026 outlook slides, the company projects sales growth near the upper limit of its 5%-7% target, though it anticipates adjusted operating profit margins closer to the low end of the range, along with slightly reduced free cash flow compared to 2025.
Caterpillar reported an 18% jump in fourth-quarter sales to $19.1 billion, with adjusted earnings hitting $5.16 per share. The power and energy segment saw a 23% increase, reaching $9.4 billion in sales. However, the company pointed to tariffs and other manufacturing challenges as headwinds for its profit margins. (MarketWatch)
On the post-earnings call, CFO Andrew Bonfield pegged first-quarter incremental tariff costs at roughly $800 million, adding that “the run rate should improve towards the second half of the year” as the company works to reduce its exposure. He told analysts tariffs won’t be resolved in just one quarter and said management intends to maintain its margin targets, even if the short-term picture looks messy. (The Motley Fool)
Brokers were active on Friday. Citigroup bumped its price target up to $760 from $710, and Bank of America followed, raising its target to $735, according to MT Newswires. (MarketScreener)
U.S. markets are closed for the weekend, so all eyes turn to Monday’s open to see if the two-day earnings swing holds. The key question: can Caterpillar boost shipments of power equipment without sacrificing margin amid pricing, mix, and supply challenges?
The setup works both ways. Should tariffs expand or customers hold off on major data-center projects, the order flow could slow sharply—and any margin squeeze would hit quickly.
Zacks Investment Research flagged the first-quarter report, due April 29, as the next key moment. Investors will watch closely for signs that tariff relief is taking hold and that demand is driving solid earnings. (Zacks)
