Caterpillar (CAT) Price Target Raised by BofA as Turbine Demand Broadens

Caterpillar Inc. (NYSE:CAT) is included among the 16 Best Dividend Stocks with Rising Payouts.

On February 10, BofA raised its price recommendation on Caterpillar Inc. (NYSE:CAT) to $825 from $735. It reiterated a Buy rating on the stock. The firm said its recent checks show turbine demand is expanding beyond data centers, which should help ease concerns about overcapacity. The analyst also pointed to the “eyepopping growth” in Caterpillar’s power generation unit and noted that oil and gas demand rose 24% year over year, a trend investors may be overlooking.

Caterpillar is seeing benefits from AI growth in more than one way. Its construction equipment plays a key role in building data centers. At the same time, its Power & Energy segment is gaining momentum, as data centers rely on its turbines and large engines to ensure stable and backup power. The company, which marks its 100th year in 2025, reported record revenue of $67.6 billion, up 4%. The increase was driven mainly by stronger equipment sales. Caterpillar operates across three segments, and its Power & Energy unit stood out. Sales in that segment reached $9.4 billion in the fourth quarter, up 23% from the same period last year. The business includes products such as natural gas generators and battery storage systems.

One area of weakness was profitability. Full-year earnings per share declined 14.6% to $18.81. The drop was largely tied to higher incremental costs, including the impact of tariffs. Even so, the outlook remains supported by strong demand. Caterpillar reported a record backlog of $51.2 billion in the fourth quarter. On January 28, the company also announced an agreement with American Intelligence and Power. Under the deal, Caterpillar will supply natural gas generators and battery storage to deliver 2 gigawatts of power to AIP’s Monarch Compute Campus in West Virginia by 2027.

Caterpillar Inc. (NYSE:CAT) manufactures construction and mining equipment, along with off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company operates through its Construction Industries, Resource Industries, and Power & Energy segments. It also offers financing and related services through its Financial Products division.