[Business & Issue] Caterpillar Transforms into an AI Beneficiary... Marching to All-Time Highs

Stock Price Doubled Since May Last Year
Growth Driven by Power Equipment and AI-Integrated Heavy Machinery
Focus on US Interest Rate Policy and Real Estate Market Trends

On the 7th (local time), a Caterpillar compact excavator equipped with artificial intelligence (AI) was unveiled at the Consumer Electronics Show (CES) in the United States. Photo by Reuters Yonhap News

The stock price of Caterpillar, a leading American heavy equipment company, has continued to reach all-time highs since the beginning of the year. The company's generator business is benefiting from increased demand for AI data center construction, and rising expectations for the development of AI-powered heavy machinery in partnership with Nvidia have further fueled the stock's upward trend. However, there are also warnings that the recent sharp rise in the stock price has led to concerns about overvaluation, making it necessary to pay close attention to future US interest rate policies and the potential recovery of the real estate market.

Stock price doubled since last May... Marching to all-time highs

On January 15 (local time), Caterpillar's stock price closed at $647.18 on the New York Stock Exchange (NYSE), marking its seventh consecutive day of gains since January 7. Its market capitalization reached $302.8 billion (approximately 446 trillion won), surpassing $300 billion for the first time. The upward momentum has continued even after the stock hit a record high of $636.35 on January 13.

At the beginning of last year, Caterpillar's stock struggled due to the impact of former President Donald Trump's tariff war. Concerns about shrinking overseas exports of its core construction equipment products led to a decline in the stock price through May. However, as demand for AI data centers expanded, Caterpillar's generator division saw increased sales, leading to a rebound in the stock price.

In the third quarter of last year, Juul Capital Partners, which is building an AI data center in Utah, ordered more than 700 natural gas generators from Caterpillar, resulting in a significant boost in sales. Caterpillar's third-quarter revenue last year reached $17.6 billion, up 9.3% from the same period the previous year, with the generator division alone growing by 17%.

Kyle Menges, a researcher at Citibank, told Barron's, "As the power consumption of AI data centers increases, sales of gas turbines and generators produced by Caterpillar are also rising," adding, "Caterpillar's AI data center-related revenue forecast for 2030 has been raised from $11 billion to $15.5 billion."

Transforming from a heavy equipment leader to an AI beneficiary... Collaborating with Nvidia on AI-powered heavy machinery

Caterpillar diesel generator. Caterpillar official website

Founded in 1925, Caterpillar is a leading American construction equipment manufacturer. The company primarily produces and exports construction machinery such as excavators and bulldozers, mining equipment, marine diesel and natural gas engines, industrial turbines, and diesel-electric locomotives. As a result, its stock price has traditionally responded to trends in the global real estate and construction markets.

Recently, however, Caterpillar has been recognized as a beneficiary of the AI boom. In particular, the announcement that Caterpillar is collaborating with Nvidia to develop AI-powered heavy machinery has fueled expectations for increased demand for automated equipment. Since last year, the two companies have been conducting experiments to operate construction machinery such as excavators and trucks using voice recognition AI.

At the world's largest electronics and IT exhibition, CES, held on January 8, Caterpillar announced that it is developing new AI-powered heavy equipment by integrating Nvidia's AI platform "Thor" into its machinery. The Thor platform is designed to enable technicians to use optimized equipment operation methods based on AI data analysis, even in areas with limited internet connectivity.

Joe Creed, CEO of Caterpillar, who attended CES, emphasized, "All infrastructure that supports modern technology, such as data centers, power grids, and roads, is ultimately built on a physical foundation," adding, "Caterpillar will infuse new intelligence by combining AI, autonomy, and data analytics behind the scenes."

Focus on US interest rate policy and real estate market recovery... Volatility may increase 

Federal Reserve (Fed) building located in Washington DC, USA. Photo by AP News Agency

However, some analysts warn that Caterpillar's stock price could become more volatile depending on future US interest rate policies and the state of the real estate market. While expectations for AI-driven growth are high, the company remains sensitive to trends in the construction industry.

The US construction market is currently experiencing a downturn. On January 10, it was reported that the number of new housing starts in the US for October 2025 was 1,246,000 units, down 7.8% compared to the same month the previous year. The number of new building permits also declined by 1.1% year-on-year to 1,412,000 units. It is expected that demand in the US construction market will not recover until there is a significant cut in the benchmark interest rate this year.

Angel Castillo, an analyst at Morgan Stanley, stated, "Some investors seem to forget that Caterpillar is still a cyclical stock, with half of its revenue dependent on exports of construction equipment," adding, "While the strong growth potential of the AI and generator divisions is recognized, considering the high likelihood of a construction market slowdown this year, the current stock price appears to be excessively valued."