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Caterpillar posts Q4 EPS growth after five quarters of declines, but tariffs and rising costs squeeze margins as 2026 profitability faces pressure.
With a 26% year-to-date gain, Caterpillar stock (NYSE: CAT) is riding a wave of significant momentum that has brought the stock to a critical technical juncture.
The Dow Jones Industrial Average (NYSEARCA:DIA) has climbed 3.4% year-to-date through Wednesday, but three industrial and energy giants are leaving the broader index behind.
Record revenues, rising estimates and stronger ROE tilt the edge toward Caterpillar in this heavy machinery battle.
Zacks.com users have recently been watching Caterpillar (CAT) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Macroeconomic data show a mixed picture: January jobs beat expectations, but 2025 revisions reveal anemic job growth and persistent inflation above the Fed's 2% target. AI-driven capital expenditures are fueling gains for select industrials like Caterpillar (CAT), while tech hyperscalers increasingly rely on debt to fund expansion.
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CAT stock has surged roughly 120% over the last twelve months, recently hitting new all-time highs above $775. This momentum is largely fueled by the AI infrastructure boom, which has transformed its Energy & Transportation segment into a primary growth engine.
India's infrastructure boom is creating opportunities for U.S. industrial companies with the scale and capabilities to serve the world's most populous nation.
I see a rising risk of a second inflation wave, with consensus underestimating persistent inflation above 3% through 2026. Leading indicators like the ISM Manufacturing Prices Index and commodity prices signal renewed inflationary pressures despite subdued official CPI data. My investment thesis favors energy royalties, critical materials, infrastructure, and luxury stocks with strong pricing power to offset inflation risks.
CAT posts record Q4 revenues and backlog as volumes surge, but margin pressure and a premium valuation raise questions on what to do next.