Key Takeaways
- Caterpillar fell 6% today, with Quanta Services and Comfort Systems USA, after Democrats won Congress.
- Caterpillar had no news; investors trade it as an AI power stock.
- Analysts expect its EPS to roughly double by 2028, on a record $78 billion backlog.
- Its forward P/E fell from 42x in June to 20x before the election.
Caterpillar (CAT) fell 6% this morning after Democrats won the Senate and the House in Tuesday’s midterms.
Investors dumped AI infrastructure stocks on fears of tighter rules for data centers, hitting contractors Quanta Services (PWR) and Comfort Systems USA (FIX).
Caterpillar got lumped in
Bloomberg Intelligence analyst Christopher Ciolino said on Bloomberg’s The Tape podcast that the stock “has certainly been caught up in this AI trade given their power generation and data center exposure.”
Its third-quarter power generation sales rose 30%, and its backlog hit a record $78 billion. The new Congress doesn’t sit until January, and President Trump could veto any data center bill.
Analysts expect normalized EPS to roughly double, from $19.06 in 2025 to $38.77 in 2028:
Those estimates rest on orders already placed, so I don’t expect today’s result to move them.
Quanta fell 13% and Comfort Systems fell 17%, harder than Caterpillar. Yet Quanta raised its 2026 outlook on Oct. 29 on a record $63.7 billion backlog, and Comfort Systems’ backlog nearly doubled in a year, to $17.81 billion. If data center customers were getting cold feet, those order books would show it first.
The selling reached bitcoin miners, too: MARA Holdings (MARA) fell 4% after Keefe Bruyette downgraded two of its peers this morning, following Gina Hinojosa’s win over Gov. Greg Abbott in Texas.
TIKR tracks 29 analysts on Caterpillar. How many say “Buy”?
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The AI premium is mostly gone
Caterpillar traded at 20x forward earnings going into the election, down from 42x at the end of June, close to its 19x five-year average:
Lumentum (LITE) fell 10% without news of its own, too. It went into the election at 26x forward earnings, below its 30x five-year average:
Caterpillar is priced like Caterpillar again
At about 19x forward earnings today, Caterpillar is back to its usual multiple, and I see today’s drop as a chance to buy a growing power business.
Of course, Atlas Energy Solutions, which has a 1.4-gigawatt framework deal for Caterpillar power equipment, said Tuesday that Texas paused air permits for data center projects. Delays like that would hit orders before Congress acts; its fourth-quarter report in late January is the next test.
So what is Caterpillar stock actually worth?
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