How Caterpillar Crushed the Magnificent 7 in 2025 -- And It's Not Done Yet!

"Six of the seven have experienced mixed or negative returns at points throughout the year, with broad concerns over valuations, sector rotations, and sustainability weighing on performance. In contrast, one unexpected name has outperformed six of the seven: Caterpillar ( ), the heavy equipment manufacturer. On a total return basis (capital appreciation plus dividends), Caterpillar trails only Alphabet by about one percentage point or so as of last Friday's close."

"Yet less than two weeks ago, Caterpillar was even ahead of Alphabet in year-to-date gains. So, how is a traditional industrial company easily outpacing some of the world's largest tech giants? Caterpillar's Strong 2025 Performance Caterpillar has risen approximately 61% in 2025 compared to Alphabet's roughly 62 % gain, leaving the heavy equipment manufacturer just behind the tech behemoth and with the potential to surpass it by year-end."

"Caterpillar's outperformance stems from strong demand in its Energy and Transportation segment, particularly generators and power equipment for AI data centers and infrastructure. Partnerships like the one with Vertiv ( ) for data center power solutions have highlighted Caterpillar's role in supporting AI growth. Enduring global infrastructure spending and mining demand have also contributed, but the real standout has been in power generation and oil and gas , segments that saw sales rise 31% and 20%, respectively, in the third quarter."

Caterpillar rose about 61% in 2025, nearly matching Alphabet's roughly 62% gain and ranking as the top performer in the Dow Jones Industrial Average. The stock outpaced most members of the Magnificent 7, with Nvidia the closest comparable at almost 35% returns. Outperformance is driven by strong demand in the Energy and Transportation segment—especially generators and power equipment for AI data centers and infrastructure—and partnerships such as the one with Vertiv for data-center power solutions. Global infrastructure spending and mining demand also contributed, while power generation and oil and gas sales rose 31% and 20% in the third quarter. Tariffs earlier in the year may have cost up to $1.8 billion in 2025, but the company mitigated impacts through cost controls and pricing; inflation continues to weigh on margins.

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