Caterpillar Stock Hits All-Time High-Is There More Room to Run?

Caterpillar Inc. (NYSE: CAT) is up 28% in 2025 and is trading at a new all-time high of around $460. This comes after the stock hit an all-time high in August. But with CAT stock trading near analysts' consensus price target, investors wonder how much growth is left.

Recent news, including the company’s earnings report, suggests it could keep building gains into 2026.

Industrials have been some of the best-performing stocks in 2025. Money from the Inflation Reduction Act continues to flow into the economy, and many companies have announced aggressive spending on artificial intelligence (AI) infrastructure projects, most notably data centers. Caterpillar is producing the 1,000 to 6,000 horsepower generators that these data centers require.

Another catalyst for CAT stock comes from the number of companies that have announced commitments to onshore manufacturing in the United States. This story will play out in decades, and Caterpillar is on the front end of that story. It's literally the first step in this process.

Wherever “picks and shovels” are going into the ground, Caterpillar’s heavy equipment will likely appear.

Earnings Show Strength—Even With Tariff Pressures

The downside of investing in industrial stocks in 2025 is their exposure to tariffs, which is why investors were looking closer at that than Caterpillar’s headline numbers.

In the second quarter, Caterpillar’s operating profit fell by 18% ($622 million) year-over-year (YOY) and management attributed most of that to higher tariffs. For the full year, Caterpillar forecasted $1.3 billion to $1.5 billion in net incremental tariffs. In the third quarter alone, the company expects profits to be cut by $400 million to $500 million.

Despite that tariff drag, Caterpillar delivered a 17.6% adjusted operating margin, underscoring its operational resilience and pricing power. Plus, strong backlog growth and end-user sales highlighted robust underlying demand.

What Could Go Wrong? Risks That Could Slow CAT Stock

If the tariffs aren’t lifted, Caterpillar will continue to eat those costs. Bulls would argue that tariff-related expenses are priced in, but the price action in CAT stock suggests otherwise.

It’s also possible that companies won’t follow up on their infrastructure commitments. This could be caused by hyperscalers deciding to slow their spending if they see slower demand for AI or cloud spending. A more likely roadblock could come if utility or power bottlenecks slow the construction process.

From a macroeconomic perspective, chances of a recession seem low, but they’re not zero. If the U.S. economy doesn’t grow as anticipated, it could impact construction and book ordering for companies like Caterpillar. Conversely, if the economy continues to grow, higher labor and input costs could impact construction projects.

Many of these scenarios seem unlikely, but they show that Caterpillar's long-term thesis is contingent on robust industrial demand and infrastructure investment.

Buy-the-Dip Opportunity for Investors

The recent surge in CAT stock has pushed it slightly above its consensus price target. The stock has made a strong bounce above its 50-day simple moving average (SMA). However, an RSI of 75 suggests that the stock is overbought.

But this is likely to be a buying opportunity. Analysts have been raising their price targets since the company’s earnings report. The most bullish outlook comes from Baird, which raised its price target from $495 to $540. That would be a 17% increase from the stock’s price on Sept. 18.

That means CAT stock may be a buy without a pullback. But, if investors do get a pullback, that would be a strong buying signal.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "Caterpillar Stock Hits All-Time High—Is There More Room to Run?" first appeared on MarketBeat.