Which Industrials Stock Do Analysts Like Better: Deere or Caterpillar?

It's a storied industrial rivalry that has endured for over a century: Caterpillar (NYSE: CAT) versus Deere (NYSE: DE).

Both companies were founded as manufacturers of farm equipment, mainly tractors, one in green and the other in yellow. Of course, their offerings are much broader today. The two heavy machinery giants make mining and construction equipment, power generation systems, and much more, sold around the world.

Image source: Getty Images.

And both stocks have had a great 2026. Caterpillar is up 41% year to date, while Deere has climbed about 36%. For comparison, the broader market, as measured by the S&P 500 index, is up 14% this year.

The question for investors today is, which stock has more upside potential?

Based on Wall Street's price targets, which are the prices analysts see the stocks at in roughly a year, Caterpillar is the more attractive of the two stocks right now. The average price target for Deere is now about $694, about 10% above the current price of $633 a share. But the average price target for Caterpillar is around $971, a 20% premium over the current share price of $811.

Different stories have emerged about the two companies

Why the difference?

Well, the narratives surrounding the two companies have diverged in recent years. Caterpillar has emerged as an artificial intelligence (AI) play, as its construction equipment and, more importantly, its power systems, are in high demand by so-called hyperscalers building massive data centers. The company's revenue climbed 24% in the second quarter to $20.5 billion, while adjusted earnings per share soared 73%. Sales from its power and energy segment surged 72%, driven by demand from electricity-starved data centers. Perhaps most impressive, Caterpillar reported a $72 billion order backlog, which has grown 92% over the past year.

Deere also had an impressive quarter, its third, with revenue up 5% over the same quarter last year to $12.6 billion, and earnings per share up 7.3% to $5.10. But the forward story is different. The company predicts that 2026 was the bottom of the agricultural equipment cycle and that demand will rise in 2027. Management reports early-order program trends, improving used-equipment inventories, and increasing customer adoption of advanced technologies across its businesses. And Deere, too, has an AI angle: Last month the company introduced JD, an AI assistant that collects data from farm equipment and helps farmers make better decisions.

But analysts seem more impressed by Caterpillar's power and energy segment, given the forecast for massive power demand from AI infrastructure. If they're right, and I think they probably are, Caterpillar is the better investment right now.

Matthew Benjamin has positions in Deere & Company. The Motley Fool has positions in and recommends Caterpillar and Deere & Company. The Motley Fool has a disclosure policy.