Hedge Funds Are Buying Power From Caterpillar, (CAT) Says Jim Cramer

We recently published 10 Stocks On Jim Cramer’s Mind & His Thoughts On Enterprise AI.  Caterpillar Inc. (NYSE:CAT) is one of the stocks on Jim Cramer's mind.

Caterpillar Inc. (NYSE:CAT) is an agricultural and construction machinery manufacturer. Its shares are up by a strong 123% over the past year and by 26% year-to-date. The firm ended 2025 on a strong note as it posted $67.6 billion in revenue to mark 4% growth and set a new record. Within its businesses, Caterpillar Inc. (NYSE:CAT)’s Power & Energy unit was a standout in terms of performance as it brought in $9.4 billion in revenue and marked a 23% annual growth. Following the earnings, Bank of America raised Caterpillar Inc. (NYSE:CAT)’s share price target to $825 from $735 and kept a Buy rating on the shares. According to BofA, the firm is experiencing demand for its turbines beyond the traditional data center sector. It added that the demand for power generation products as a whole was surprising. Cramer discussed the impact of power product demand on Caterpillar Inc. (NYSE:CAT) before the earnings. The CNBC TV host believes that data center buildout and power products demand are key tailwinds for the company. In this appearance, he revealed that hedge funds are also playing a key role in Caterpillar Inc. (NYSE:CAT)’s top line:

“No this is actually happening, because the hedge funds are buying up power from Caterpillar, which is one of the reasons why Caterpillar’s quarter was so good. And putting it where you don’t have to worry about where housing is.”

While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.