Caterpillar shares are down 10% in five days. Is it worth buying on a downturn?

Caterpillar shares fell nearly 10% in five trading sessions before recovering some of the losses on Friday, December 19. The company, known for its excavators and bulldozers, has been the surprise beneficiary of the artificial intelligence boom that has seen its stock soar 59% in 2025. Some analysts believe the rally could continue.

Shares of Caterpillar fell by 9.6% over five trading sessions ended Thursday, December 18, Bloomberg reported. It became for securities the worst dynamics for such period since April, the agency noted. It was also the weakest performance in the S&P 500 Machinery index, it added. The decline was due to investor doubts about the sustainability of growth associated with artificial intelligence, Bloomberg said.

At trading on Friday, December 19, the securities partially recovered losses: they rose in price by 2.8% at the moment.

Caterpillar turned out to be an unobvious beneficiary of the AI hype because of its small business selling gas turbines that can be used to power data centers, Bloomberg writes. Because of this, Caterpillar's stock has taken a big hit in 2025, adding 59% to its price. A week ago, on December 12, the securities reached an all-time trading record at $627.50, but have since fallen 7%.

Caterpillar shares fell most of the week in parallel with the technology sector as a whole, according to Miller Tabak + Co.'s chief market strategist. Matt Maley. "As anything AI-related suddenly performs poorly, CAT is doing the same thing," he told Bloomberg. According to Maley, when AI was at its peak, investors overpaid for any AI-related stock, including Caterpillar. Now, enthusiasm for AI is waning, and the same stocks are getting cheaper.

Explosive Options founder Bob Lang noted that Caterpillar shares are still maintaining momentum after a strong report in October. As for AI, "the fact that Caterpillar is now at the forefront of this area will only benefit them in the long run," he believes.

RBC analyst Sabahat Khan, said in a Bloomberg note that the real risk lies in the earnings expectations "that investors may have over the next four to five years." In addition, it's unclear whether demand and the AI theme will still be driving Caterpillar's stock upward in a few years, he added.

According to 28 analysts' forecasts, the average target price for Caterpillar stock is $589.07, Investing.com reports . That's only 2% higher than the current one. In mid-December, Citi raised its target price to $690 from $670, maintaining a Buy recommendation (Buy rating). HSBC in November raised its rating on Caterpillar securities from Hold (advice to hold) to Buy and raised its target price to $660 from $405 immediately.

At the same time Morgan Stanley in November warned that the market is too optimistic about the prospects of Caterpillar. The bank's analyst retained the recommendation to sell the company's shares with a target price of $395.

In general, analysts' opinions on Caterpillar diverge: the securities have 14 recommendations to buy, but at the same time 11 advise to hold, two more - to sell, MarketWatch shows.

This article was AI-translated and verified by a human editor