Jefferies Sees Further Upside as Caterpillar's (CAT) Broader Portfolio Gains Traction

Caterpillar Inc. (NYSE:CAT) is included among the 12 Best Stocks to Buy for the Long Term.

On January 27, Jefferies raised its price target on Caterpillar Inc. (NYSE:CAT) to $750 from $700 and reiterated a Buy rating on the stock. The analyst said the setup for Q4 earnings “feels in line to potentially conservative,” pointing to steady volume trends and continued margin improvement across both business segments as support for the higher target. While Caterpillar’s power generation narrative is “now well appreciated,” Jefferies noted that faster growth in the rest of the portfolio could still lift the shares further.

Caterpillar Inc. (NYSE:CAT) is preparing to report its Q4 2025 results, and expectations are positive following a very strong prior quarter. In Q3 2025, revenue from the energy and transportation segment rose 17% year over year, helping drive total company revenue growth of 10%. CEO Joe Creed has told investors that the company’s backlog continues to grow as Caterpillar supplies critical power-generation solutions for AI data centers. The company also benefits from demand for its heavy equipment used in the construction of those facilities.

Caterpillar has been a dominant force in construction and industrial equipment for more than 100 years. While it has weathered countless boom-and-bust cycles, the current surge in AI-related demand could be the next major driver pushing the stock toward new all-time highs.

While we acknowledge the potential of CAT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.