11:20 AM EDT, 06/20/2025 (MT Newswires) -- Caterpillar ( CAT ) is underappreciated as a beneficiary of the artificial intelligence-driven infrastructure cycle, supported by its diversified backlog, stable services revenue, and ongoing share buybacks, Oppenheimer said in a note Friday.

Analysts, including Kristen Owen, noted that a recent tour of Caterpillar's ( CAT ) large engine facility in Lafayette, Indiana, underscored the scale of its investment and operational flexibility. The company is sustaining production while reconfiguring lines, upgrading equipment, and modestly expanding its footprint to support a growing backlog.

Caterpillar's ( CAT ) core opportunity in the data center market lies in backup generator sets, with early-stage interest in higher-capacity turbines also building, the analysts said. Growth is further supported by demand from microgrids, renewables backup, and rising natural gas applications, according to the note.

While the company didn't disclose order lead times, it noted its $35 billion backlog comprises committed orders, with about 75% expected to be fulfilled over the next twelve months.

"Caterpillar ( CAT ) is underappreciated as a play on AI for the physical world," the analysts said, pointing to backlog diversity, services durability, and buybacks as structural drivers of the next growth phase.

Oppenheimer maintained an outperform rating and a $395 price target on the stock.

Price: 360.43, Change: +0.63, Percent Change: +0.18