Be it Nvidia, Apple, Amazon.com or Microsoft: the Dow Jones Industrial Average Index includes well-known US technology corporations. At the moment, however, a traditional value stock is stealing the show from these growth names: over a one-year period, Caterpillar’s market capitalization has expanded by more than 120%. This makes the construction machinery manufacturer the top performer in the Dow Jones. The surge in the stock, trading under the symbol “CAT,” is indeed linked to a topic that investors usually associate with Nvidia & Co.: artificial intelligence. The AI boom is driving a significant expansion of data center capacity. Caterpillar is benefiting from this trend with gas generators, backup power systems and battery storage solutions. These products come from Caterpillar’s “Power & Energy” division.
In 2025, the division increased revenue by 12% to USD 32.2 billion. The power generation segment in particular recorded strong growth, with sales rising by nearly one third. “Power & Energy” now accounts for almost half of total group revenues, overtaking the core construction equipment business. On the earnings side, Caterpillar was held back in the year of its 100th anniversary by US trade policy. Although the company posted record revenues, operating profit declined by nearly 15% to USD 11.5 billion. The impact of tariffs became evident in production costs, creating an additional burden of more than USD 2.1 billion in 2025. For 2026, the industry giant expects tariff-related costs of USD 2.6 billion.
Whether this forecast will hold following the recent decision by the Supreme Court - which declared most of the tariffs imposed by the Trump administration unconstitutional - remains to be seen. What is certain is that Caterpillar entered the current financial year with a robust order book. At the end of 2025, the company reported orders totaling a record USD 51 billion, 71% more than 12 months earlier. In addition to the thriving “Power & Energy” division, analysts believe the company could also return to growth in its core construction equipment business. Experts point to rising orders from equipment dealers, stabilizing non-residential construction activity and stronger demand for rental equipment.
Despite all the enthusiasm, the Dow Jones highflyer is no longer inexpensive. According to Reuters, Caterpillar is trading at around 33 times expected 2026 earnings. By comparison, the broad-based S&P 500 Index has a forward 12-month price-earnings ratio of 21.5. Against this backdrop, a Barrier Reverse Convertible offers an interesting alternative investment. Investors can count on a fixed coupon payment regardless of further share price performance. The nominal amount offers partial capital protection. A new Softcallable BRC based on Caterpillar offers a yield of 15% per annum in USD. The CHF-denominated equivalent provides an annual coupon of 11%. The barrier is set at 64% of the initial level. As long as Caterpillar does not fall to or below this level over the next 18 months, investors will receive the full nominal amount back. If this condition is not met, the investment would be exposed to the full price risk of the underlying asset.
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