Anthropic $3.4B deal raises questions on AI's insatiable power needs

Evercore ISI cut its Caterpillar (CAT) price target to $833 from $1,045 but maintains an Outperform rating, seeing 40% upside. CAT stock fell 34% in six months due to cautious Q4 outlook and political concerns. Q3 sales rose 17% to $20.7B, EPS to $7.20, with a record backlog of $78B. Analysts expect $27.11 EPS this year, $32.25 next year.

Caterpillar (CAT) reports a record backlog of $78B, nearly matching its annual revenue. Management highlights capacity constraints in its Power and Energy segment, with orders extending into 2029. The backlog grew 96% YoY, but revenue recognition depends on delivery timelines. CAT plans to triple large engine capacity by 2030, facing operational challenges. Q4 2026 sales are expected to grow moderately.

Michael Burry reduced his bearish Caterpillar (CAT) position by 75% after his put options quadrupled in value. CAT's stock fell 10% last week but rebounded 7.2% to $598.88. Q3 revenue rose 17% to $20.7B, with earnings up to $7.20 per share. CAT's Power & Energy division saw 18% sales growth, driven by data center demand.

Anthropic agreed to pay $3.4 billion for 1.7 gigawatts of Caterpillar gas generators, originally ordered by OnePWR Solutions. The deal is roughly the size of Caterpillar's Q3 power generation sales. Anthropic, heading for a large IPO, has significant cash reserves. Caterpillar's backlog includes the order, improving payment certainty.

Caterpillar (CAT) stock fell 3.2% in morning trading due to higher-than-expected October CPI data, which increased expectations of a December Fed rate hike. The decline follows a 7.2% gain on Monday, driven by a market rally and short-covering after Michael Burry reduced his bearish position. Institutional investors also trimmed their CAT holdings in Q3. The broader market also declined, with the S&P 500, Dow Jones, and Nasdaq each down around 0.5%.

Caterpillar (CAT) shares rose 6.61% to $595.53 after Anthropic agreed to a $3.4 billion deal for gas-fired generators. The order, originally placed by OnePWR, is part of CAT's Power & Energy segment, which saw 18% sales growth in Q3. Adjusted EPS increased to $7.20, and operating margin reached 20.4%. The deal converts existing orders into funded ones, reducing risk but not adding to backlog.