Caterpillar’s third quarter was marked by strong sales momentum and a positive market reaction, with management attributing performance to robust demand across Energy & Transportation, Construction Industries, and Resource Industries. CEO Joseph Creed highlighted a 25% increase in Energy & Transportation sales, particularly driven by power generation for data centers and higher activity in oil and gas. The backlog grew substantially, underpinned by large orders in power generation and ongoing infrastructure projects in North America. Management noted that unfavorable pricing and higher tariffs were partially offset by increased volumes.

Is now the time to buy CAT? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Caterpillar’s Q3 Earnings Call

• Kyle Menges (Citi) asked about the scale and future capacity for data center prime power demand. CEO Joseph Creed said Caterpillar is “able to meet the orders” and is monitoring lead times as orders grow, with capacity investments planned as needed.
• Angel Castillo Malpica (Morgan Stanley) pressed on margin sustainability in Energy & Transportation. CFO Andrew Bonfield explained that tariffs are a margin headwind, but the segment’s strong demand and pricing environment have kept margins relatively stable, with further margin accretion tied to volume and product mix.
• David Raso (Evercore ISI) asked about incremental margins and price realization for 2026. Bonfield noted that tariff headwinds will continue, but tax rate changes may favorably impact future margins. He said further details will be shared at Investor Day.
• Tami Zakaria (JPMorgan) questioned whether sales acceleration was due to market share gains or end-market improvement. Creed pointed to successful merchandising programs and capacity ramp-up as key contributors, especially in North America.
• Jamie Cook (Truist Securities) inquired about backlog growth sustainability and whether Q4 will be the peak of tariff headwinds. Bonfield said Q4 tariff impact should be the highest, and Creed expects continued backlog momentum, particularly in power generation.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely monitor (1) the pace of data center power demand and related backlog growth in Energy & Transportation, (2) progress on supply chain adaptation and cost mitigation in response to tariffs, and (3) continued service revenue expansion, especially in Solar and autonomous mining solutions. Execution on capacity expansion and service monetization will be critical to sustaining profitable growth.

Caterpillar currently trades at $545.45, up from $524.57 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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