Caterpillar Stock Jumps 7% on Anthropic's $3.4 Billion Deal, With $628.70 Next

TradingKey - Caterpillar (NYSE: CAT) jumped 7.21% to $598.88 on Monday, November 9, after reports that Anthropic will spend $3.4 billion on Caterpillar gas-fired generators for its AI data centers, and overnight trading edged up to $600.84. It came on a strong day for the whole market, as the S&P 500 rose 2.35% and industrials led all 11 sectors.

The bounce followed a slide of almost 22% from $713.38 before the October 29 earnings report to $558.63 on Friday, November 6. Even after Monday's jump, CAT is about 16% below its pre-earnings level and about 44% below its 52-week high of $1,073.46.

Anthropic Takes Over Orders Instead of Waiting

Anthropic agreed to spend $3.4 billion on 1.7 gigawatts of gas-fired generators, including engineering and installation work. It did not buy San Antonio-based OnePWR Solutions. Instead, it took over OnePWR's Caterpillar orders, placed about two years ago, which still needed financing. Reuters reported the deal was reached in late September.

Average US delivery times for this kind of equipment have reached about six years, according to Tom's Hardware, so taking over existing orders lets Anthropic skip the queue.

Because these are existing orders, the gain for Caterpillar is lower risk rather than new sales: an order that lacked funding now has a well-funded buyer. The $3.4 billion is roughly one quarter of power generation sales, which rose 30% to $3.4 billion in Q3. The deal adds nothing new to the backlog, yet it was enough for a 7% jump, which shows how far the stock had fallen.

A Record Quarter That Still Disappointed

Q3 sales and revenues rose 17% to a record $20.7 billion, above the $20.37 billion estimate, and adjusted EPS, which leaves out one-time items, rose to $7.20 from $4.95, beating the $7.03 estimate. Power & Energy sales rose 18% to $8.8 billion with a 24.4% segment margin, the share of sales kept as profit, and the backlog hit a record of about $78 billion.

But Caterpillar kept its full-year outlook for mid-to-high-teens sales growth and expects only moderate growth in Q4. Costs also rose, with unfavorable manufacturing costs of $252 million in Construction Industries, including freight, and $208 million in Resource Industries, mainly materials and tariffs. Full-year tariff costs are expected at about $2.2 billion. CEO Joe Creed said "bringing additional capacity online is still the top pacing factor for growth in Power and Energy."

The selling then picked up in the week to November 6, when CAT fell 10.3% as AI-linked stocks dropped after the midterm elections.

Analysts Cut Targets but Stay Positive

Several analysts cut their targets after the report, including Morgan Stanley to $675 from $915, DA Davidson to $685 from $882 and Citi to $800 from $950, according to StockAnalysis. The average target is still about $823, and the stock trades at about 20 times next year's expected earnings.

In my view, the Anthropic deal shows how tight power equipment has become for AI, but it does not fix the cost and capacity problems behind the post-earnings drop.

Caterpillar Technical Analysis: Daily Close Above $628.70 Could Open $675.79

On the daily chart, the bounce started at $551.78, the same area that supported the stock in January, and it followed a steep slide from the October high near $876.71. Even so, the bigger trend remains bearish, because CAT still trades below a falling trendline from the July peak, a line drawn across its lower highs.

Caterpillar Stock Price Chart - Source: Tradingview

RSI, a momentum gauge that runs from 0 to 100, has climbed to about 33 after dipping below 30, the oversold line. The MACD, a trend-following momentum indicator, is still negative, but a bounce from oversold levels like this often signals that selling has gone too far.

The first hurdle is $628.70, near the 23.6% Fibonacci retracement of the slide from October, a level traders use to measure how much of a drop has been recovered. A daily close above it could open $675.79. On the downside, a drop below $551.78 could send CAT toward $502.37.

I'm cautiously bullish in the short term while CAT holds $551.78, with $628.70 as the first target.

Key Levels

• Last close: $598.88, up 7.21% on Monday, November 9 (overnight: $600.84)
• Support: $551.78, $502.37
• Resistance: $628.70, $675.79
• RSI: 32.84, just above the 30 oversold line
• Bullish trigger: Daily close above $628.70
• Bearish trigger: Daily close below $551.78

FAQs

Why did Caterpillar stock jump on Monday?

Caterpillar rose 7.21% after reports that Anthropic will spend $3.4 billion on 1.7 gigawatts of Caterpillar gas-fired generators, taking over orders first placed by OnePWR Solutions, on a day when the S&P 500 rose 2.35%.

What is the Caterpillar stock forecast now?

The bias is cautiously bullish in the short term while CAT holds $551.78 on the daily chart. A daily close above $628.70 could open $675.79, while a drop below $551.78 could send it toward $502.37.

Bottom Line

Caterpillar's power business is in high demand, but the stock is still in a downtrend after a costly quarter. I expect a test of $628.70 while CAT holds $551.78, and only a daily close above that level would show the rebound has room to run.