Caterpillar runs into AI hype wall, endures worst slide since April
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Caterpillar Inc. became an “AI darling” out of the blue because of the heightened power demand brought on by the spread of data centers. However, sentiments have shifted, and its stock is now on a decline, raising eyebrows and forcing investors to ask important questions rather than just giving in to FOMO. Caterpillar Inc. saw an uncharacteristic 4.7% drop in its shares on Wednesday, its worst single-session performance since April. By Thursday, when five sessions simultaneously ended, the stock had fallen by about 9.6%, leading other Dow Jones Industrial Average decliners, as it pulled away from its record high of around $627.50, a level it achieved just days before. Caterpillar Inc. stock price. Source: Google Finance Why’s Caterpillar’s stock down? The biggest reason for this slide has been attributed to growing market skepticism about the sustainability of AI-driven/motivated trades. Experts have admitted that anything related to AI is suddenly underperforming, and CAT, the surprise AI darling, is not exempt. Many investors, especially those who just joined the CAT wagon, did so because they saw it as a play on AI infrastructure. Everyone wants AI, AIs need data centers, data centers need power generation equipment, and gas turbines used to support the massive electricity demands of AI data centers, which is where Caterpillar comes in. “The AI phenomenon has helped multiple expansions for many AI-related stocks. Now it is causing some multiple contractions,” Matt Maley, chief market strategist at Miller Tabak + Co, said. Aside from the AI hype factor, another potential reason for the fall is the disconnect in earnings between the company’s revenue segments. While its Energy and Transportation segment, the largest one, has been processing demands related to data centers and has seen a 17% sales jump, the other major segments from which it generates revenue have been…
Filed under: News - @ December 20, 2025 6:27 pm