Key Takeaways
- Caterpillar fell 6% today as the AI selloff spread from chip and storage stocks like Western Digital to industrials like Vertiv and Quanta Services.
- Investors are selling Caterpillar as a data-center stock, though power generation was 15% of its 2025 sales and revenues, and the selling looks overdone.
- Analysts still expect normalized EPS to roughly double from 2025 to 2028.
- Before today’s drop, Caterpillar traded at 20x forward earnings, less than half its June peak.
Caterpillar (CAT) fell 6% today. Yesterday it dropped 5% while the Dow jumped 3%.
Today, the AI selloff that hit chip and storage stocks like Western Digital (WDC), down 17%, spread to the industrials that build and power data centers. Vertiv fell 14%, and Quanta Services slid 12%.
Democrats won both houses of Congress on Tuesday. UBS strategist Keith Parker pointed out that “governors favoring data center pauses won in a number of states, including Texas.”
Chip and storage names took the worst of it. ASE Technology (ASX) sank 21%, and Everpure (P) fell 16%. United Microelectronics (UMC) dropped 17% the same morning it reported October revenue up 18.33% from a year earlier.
Power is only a slice of Caterpillar
Caterpillar earned its spot in the AI trade. Its backlog hit a record $78 billion in the third quarter, with turbine orders running into 2030.
But power generation brought in $10.3 billion of Caterpillar’s $67.6 billion of 2025 sales and revenues, or 15%. Construction supplied $1.21 billion of the $1.84 billion rise in segment profit in the first half of 2026.
Analysts expect those earnings to keep climbing. Consensus normalized EPS goes from $19.06 in 2025 to $38.77 in 2028:
Caterpillar (CAT): normalized EPS, actual and consensus estimates, $ per share, fiscal 2023-2028 (TIKR)
Those estimates barely moved after the third-quarter report.
Back to an average multiple
Investors are paying far less for those earnings than they did in the summer. Caterpillar’s forward P/E peaked at 42x on June 30 and stood at 20x before today’s drop:
Caterpillar (CAT): forward (NTM) P/E, last 5 years (TIKR)
Today’s drop takes it to about 19x, right at its five-year average.
TIKR tracks 29 analysts on Caterpillar. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Caterpillar, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Caterpillar’s Analyst Ratings
The selling looks overdone to me
Western Digital and the chip names live on data-center spending. Caterpillar doesn’t. At an average multiple, with earnings expected to double by 2028, I think the market is selling its AI tag harder than the business deserves.
Of course, the policy risk is real. Atlas Energy Solutions, a Caterpillar power customer, said this week that Texas paused air permits for data-center projects. Caterpillar’s fourth-quarter report, due in late January, will show us whether power orders are holding up.
So what is Caterpillar stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Caterpillar could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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