Caterpillar shares climb on bullish analyst upgrade, AI power demand

Caterpillar (NYSE:CAT) shares gained as much as 2.3% on Wednesday, hitting their highest intraday level since January 24, after Melius Research analyst Rob Wertheimer upgraded the stock to a Buy.

Wertheimer highlighted stronger-than-expected momentum in Caterpillar’s (NYSE:CAT) Engines & Transportation division, driven by surging demand from data center expansions tied to artificial intelligence infrastructure.

He added $6 billion to his 2027 revenue forecast for the segment, noting that Caterpillar’s (CAT) involvement in meeting the growing power requirements of AI data centers is proving larger than previously thought.

While he doesn’t anticipate price increases on par with those seen at GE Vernova (GEV), where equipment pricing has more than doubled, Wertheimer said he expects pricing to contribute meaningfully to growth over the next few years.

Concerns about inflation and tariff-related cost pressures, which previously weighed on his outlook, appear to have been largely shrugged off by the markets, he said.

Melius set a Street-high price target of $500 a share for Caterpillar (CAT) shares.