Over the past year, Caterpillar delivered a 69% year-over-year total return, outpacing the Dow Jones Industrial Average, the SPDR S&P 500 ETF Trust and the industrials-select sector ETF. This surge was driven by unprecedented demand for data center infrastructure projects, with the company’s Energy & Transportation segment reporting a $2.4 billion increase in unfilled orders. Additionally, power-generation equipment sales for AI-driven data center buildouts rose by more than 40%, underscoring Caterpillar’s pivotal role in supporting the exponential growth of artificial intelligence workloads worldwide.

Following the recent rally, the stock is now trading at a level that closely aligns with our estimate of intrinsic value. Technical analysis highlights a series of lower highs on weekly charts and overbought momentum indicators, suggesting limited upside in the near term. With the company set to report fourth-quarter results in late January, we believe investors should adopt a neutral stance to manage risk, as expectations appear well reflected in the current valuation and any near-term catalysts are likely to be price-contained.