"This Company’s Stock Hits All-Time Highs on AI-Powered Machinery Collaboration with Nvidia [Business & Issue]"

Caterpillar transforms into an AI beneficiary
Stock price reaches all-time highs
Doubled since last May
Generator business and AI-powered equipment drive growth
Focus on U.S. 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 building artificial intelligence (AI) data centers, and expectations are rising for the development of AI-powered heavy machinery in collaboration with Nvidia, driving the stock price upward. However, there are also warnings that the stock may be overvalued due to its rapid short-term surge, and attention should be paid to future U.S. interest rate policies and the potential recovery of the real estate market.

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

On January 15 (local time), Caterpillar’s stock 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 (about 446 trillion won), surpassing $300 billion for the first time. The upward trend has continued even after the stock hit an all-time high of $636.35 on January 13.

At the beginning of last year, Caterpillar’s stock struggled due to the impact of President Donald Trump’s tariff war. Concerns over a decline in overseas exports of its main construction equipment products led to a downward trend until May. However, as demand for AI data centers expanded, sales in Caterpillar’s generator division increased, leading to a rebound in its 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 increase in sales. Caterpillar’s third-quarter revenue last year rose 9.3% year-on-year to $17.6 billion, with generator business revenue growing by 17% in particular.

Kyle Menges, a Citibank analyst, told Barron’s, “As power consumption by AI data centers increases, sales of gas turbines and generators produced by Caterpillar are also rising. The revenue forecast for Caterpillar’s AI data center-related business has been raised from $11 billion to $15.5 billion by 2030.”

From heavy equipment leader to AI beneficiary... Collaboration with Nvidia on AI-powered machinery

Caterpillar diesel generator. Caterpillar official website

Founded in 1925, Caterpillar is a representative American construction equipment company. It mainly produces and exports construction equipment such as excavators and bulldozers, mining machinery, 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, it has been recognized as a beneficiary of the AI boom. In particular, Caterpillar announced that it is working with Nvidia to develop AI-powered heavy machinery, fueling expectations for increased demand for automated equipment. Since last year, the two companies have been experimenting with integrating AI into construction equipment such as excavators and trucks, enabling operation through voice-recognition AI.

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

Joe Creed, CEO of Caterpillar, who attended the CES event, emphasized, “All infrastructure that supports modern technology, such as data centers, power grids, and roads, is ultimately built on a physical foundation. Caterpillar will infuse new intelligence by combining AI, autonomy, and data analysis in areas that are often unseen.”

Focus on U.S. 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 stock price volatility could increase depending on future U.S. interest rate policy and the real estate market. While expectations for AI-related growth are high, the company remains sensitive to the construction market.

The U.S. construction market is currently sluggish. On January 10, it was announced that the number of new housing starts in October 2025 was 1,246,000 units, down 7.8% from the same month a year earlier. The number of new building permits also decreased by 1.1% year-on-year to 1,412,000 units. The U.S. construction market is not expected to recover until the benchmark interest rate is significantly lowered this year.

Angel Castillo, a Morgan Stanley analyst, argued, “Some investors seem to forget that Caterpillar is still a cyclical stock that relies on construction equipment exports for half of its revenue. While the strong growth potential of the AI and generator businesses is recognized, considering the high likelihood of a construction market slowdown this year, the current stock price appears to be excessively valued.”