Which Industrials Stock Do Analysts Like Better: Deere or Caterpillar?

Caterpillar’s average analyst price target implies about 20% upside to $971 from $811, versus roughly 10% upside for Deere to $694 from $633. Caterpillar’s Q2 revenue rose 24% to $20.5 billion and adjusted EPS climbed 73%; power and energy sales surged 72%, while its backlog grew 92% year over year to $72 billion, driven in part by data-center demand. Deere’s Q3 revenue increased 5% to $12.6 billion and EPS rose 7.3% to $5.10; management expects agricultural equipment demand to recover in 2027 after a 2026 bottom. The article favors Caterpillar, citing stronger analyst enthusiasm for its AI-infrastructure-related power business.

Analysis

The key distinction is earnings visibility, not simply “AI versus agriculture.” CAT’s data-center exposure can support orders, but a large backlog is not equivalent to near-term revenue: conversion depends on delivery capacity, component availability, customer schedules and project power timelines. If those bottlenecks delay shipments, the market may reassess the durability of the growth premium before reported orders weaken. CAT also faces substitution and competitive pressure from other power-equipment providers, including Cummins and GE Vernova, while data-center buildouts remain exposed to grid and permitting delays.

DE offers a different optionality: a farm-equipment recovery could improve utilization and replacement demand, but the timing depends on farm economics and used-equipment conditions, not just management’s early-order indicators. Its AI assistant may strengthen customer retention or equipment differentiation; monetization and measurable productivity gains still need proof.

Over the next 1–3 months, watch CAT order-to-sales conversion, power-segment shipments and delivery commentary, alongside DE’s order trends and used-equipment inventories. Over 6–18 months, CAT’s upside depends on backlog translating into profitable deliveries; DE’s on an actual replacement cycle and demonstrable technology adoption. A crowded CAT narrative after a sharp run creates asymmetric disappointment risk. The relative thesis weakens if CAT’s backlog or power orders roll over, or if DE’s forward orders and equipment economics improve faster than expected.

Key Decisions for Investors

• For a relative-value expression, consider a modest, market-neutral long CAT / short DE position rather than treating either stock’s recent rally as an automatic buy signal. Scale in only if CAT confirms power-order conversion while DE’s recovery remains forecast-led; cap risk because both remain cyclical industrials.
• Treat CAT’s backlog as a monitoring indicator, not an earnings proxy. Reassess the long if power-segment shipments fail to follow orders or management cites persistent delivery constraints, cancellations, or delayed data-center projects.
• Keep DE on a catalyst watch: improving used-equipment inventories and early orders matter more if followed by stronger forward orders and healthier farm economics. Evidence of that combination would challenge the CAT-over-DE relative trade.
• Avoid paying up solely for DE’s AI narrative until adoption or customer economics are quantified. For CAT, compare incremental power demand with shipment capacity and competitive supply before extrapolating current growth.