Caterpillar Trades at 3x Its Historical Multiple — Michael Burry Is Betting Against It

AI information centers are putting unit connected the US electrical grid successful ways that did not look imaginable conscionable a fewer years ago, and that strain is simply a nonstop payment to dense instrumentality manufacturers, not conscionable chipmakers. US information halfway powerfulness depletion is expected to summation by 22% successful a azygous year, with full grid request astir tripling to 134.4 GW by 2030 arsenic hyperscale buildouts summation speed.

Considering grid capableness cannot beryllium accrued rapidly capable to conscionable that curve, on-site and backup powerfulness accumulation has go a important information of AI infrastructure spending, with Caterpillar Inc. (NYSE:CAT) unsocial accounting for an estimated 18% of the information halfway generator market. Notably, the institution has travel to beryllium 1 of the Dow's best-performing stocks truthful acold successful 2026, with a year-to-date instrumentality of 47.81%.

Record Backlog and P&E Pivot

The company's Q1 2026 gross came successful astatine $17.4 billion, up 22% year-over-year, with adjusted EPS of $5.54, supra expectations. The backlog down that enlargement seems to beryllium the existent story, with Caterpillar Inc. (NYSE:CAT) closing the 4th with a grounds $63 cardinal successful bid backlog, an summation of 79% year-over-year and $11.5 cardinal sequentially, owing to large task wins similar Altus and Chevron, increasing rental demand, and beardown Mining conception bid conversion.

CEO Joe Creed told analysts that the company's monolithic motor backlog, which straight powers AI information centers, has grown by implicit 3.5x since Caterpillar archetypal revealed capableness enlargement plans backmost successful January 2024.

This backlog advancement led Oppenheimer to assistance Caterpillar's terms people to $1,105 from $980 connected July 13, portion keeping an Outperform rating, expecting high-margin Power & Energy deliveries to accelerate successful the 2nd fractional of the year. However, underlying borderline trends bespeak rising friction. Resource Industries conception margins fell by implicit 700 ground points twelvemonth connected twelvemonth successful Q1, to 10%, owing to astir $600 cardinal successful quarterly tariff charges. With full-year tariff headwinds of $2.2 cardinal to $2.4 billion, Caterpillar's outgo operation is nether important unit adjacent arsenic top-line request grows.

Michael Burry's Short Position

That being said, the valuation is wherever Caterpillar's hazard communicative comes into play, and the numbers are stark. Caterpillar's trailing P/E ratio is astir 43.75x, portion its guardant P/E stands astatine astir 28.87x. Caterpillar besides trades astatine implicit 31x EV/EBITDA, providing a important premium implicit concern instrumentality peers specified arsenic Cummins, which trades astatine 19.51x. The marketplace has fundamentally priced a 100-year-old dense instrumentality shaper arsenic if it were a high-margin bundle platform.