This Unlikely Stock to Buy Could Be the Best Bet on the Future of the AI Race

Caterpillar (CAT) has emerged suddenly as one of the surprise big winners of the AI revolution. The company’s shares soared almost 10% at one point during early trade following strong third-quarter numbers, which highlighted how quickly demand is building for the backup power solutions, energy storage solutions, and industrial equipment that provide the foundation for this giant cycle of building out big data centers. With hyperscalers scrambling to construct campuses to support their race to launch artificial-intelligence-capable computing infrastructure to meet their burgeoning energy demands, Caterpillar has emerged with crucial offerings.

This momentum is also building within a larger context of strong industrial spending. Though manufacturing metrics globally have been inconsistent, spending related to electricity consumption and mission-critical transport equipment has remained strong. As a barometer due to its presence in construction, mining, and infrastructure, Caterpillar's outlook indicates that pockets within select industries are strong, especially those related to electricity consumption fueled by artificial intelligence. As analyst engagement has increased and is currently pegged to the higher end of the 52-week range, investor sentiment is adjusting on where Caterpillar stands on this infrastructure-AI chain.