Wells Fargo Turns More Bullish on Caterpillar (CAT) Amid Improving Industrial and Data Center Trends

Caterpillar Inc. (NYSE:CAT) is included among the 13 Best Long-Term Dividend Stocks to Invest in Right Now.

On February 25, Wells Fargo raised its price recommendation on Caterpillar Inc. (NYSE:CAT) to $870 from $756. It reiterated an Overweight rating on the shares. The firm increased its private non-residential construction forecasts by about 3% for 2026 and 2027. Its analysis points to improving conditions across several key areas. Wells Fargo sees signs of stabilization in semiconductor fabrication and electronics manufacturing, as well as in office and retail construction. It also expects stronger growth in power and data center construction.

During Caterpillar’s Q4 2025 earnings call, CEO Joseph Creed described the company’s Centennial year as a major milestone. He said full-year sales and revenues reached $67.6 billion, the highest level in Caterpillar’s history. He also noted that the company generated $9.5 billion in MP&E free cash flow and returned $7.9 billion to shareholders. Backlog increased to a record $51 billion, marking a 71% increase from the previous year.

Creed said quarterly sales and revenues totaled $19.1 billion. This marked the strongest quarterly performance on record and represented an 18% increase compared with the prior year. Growth was supported by higher volumes across all business segments. Demand was especially strong in the Power and Energy segment. Sales to end users increased by 37%, while power generation rose by 44%.

He also reported a full-year adjusted operating profit margin of 17.2%. Adjusted earnings per share reached $19.06. The company expanded its autonomous haul truck fleet to 827 units by the end of 2025, up from 690 units a year earlier. Creed added that power generation sales exceeded $10 billion for the year. This reflected a growth of more than 30% compared with 2024.

Caterpillar Inc. manufactures construction and mining equipment, along with diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company operates through its Construction Industries, Resource Industries, and Power and Energy segments. It also provides financing and related services through its Financial Products division.

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.

READ NEXT: 14 Best GARP Stocks to Buy According to Analysts and 14 Best Affordable Dividend Stocks to Buy According to Analysts

Disclosure: None.  Follow Insider Monkey on Google News.