Piper Sandler's Craig Johnson highlights a market rotation from traditional AI leaders to industrials like Caterpillar, driven by rising 10-year Treasury yields nearing 5%. This shift reflects a broader move where industries with heavy labor and low returns, such as industrials, financials, materials, and energy, stand to gain from AI productivity boosts. Caterpillar benefits from strong demand for its power generation equipment supporting data centers, with a backlog extending into 2028. However, rising bond yields could pressure valuations, suggesting cautious entry for new investors despite Caterpillar's strong execution and growth.
Caterpillar is experiencing unprecedented demand driven by data center power needs shifting from backup to primary power generation. The company's backlog now exceeds 2.4 times last year's revenues, with orders extending through 2030, providing stron...
Caterpillar's stock has fallen nearly 30% from its recent peak, reaching a price level where the risk-reward ratio appears attractive again. The company is shifting from being viewed mainly as a cyclical industrial to a business with growing Power & ...
