Wall Street's AI boom has produced some eye-popping winners over the past two years, but one of its most surprising may not be a chipmaker at all. It is Caterpillar Inc. (CAT). Known for its bulldozers, excavators and heavy construction equipment, Caterpillar now trades at a richer earnings valuation than Nvidia Corp. (NVDA), the company that has become synonymous with the AI revolution.
Caterpillar trades at roughly 53 times trailing earnings, compared with Nvidia's 31 times, per market data. On a forward basis, Caterpillar changes hands at more than 44 times earnings, nearly double Nvidia's forward multiple of about 23 times. The industrial giant also commands a higher EV-to-EBITDA multiple than the AI chip leader.
CAT Stock Has The AI Premium
The valuation gap isn't being driven by traditional construction demand.
Instead, investors have increasingly viewed Caterpillar as one of the biggest beneficiaries of the AI infrastructure buildout. Before a single GPU powers a large language model, data centers must be excavated, power systems installed and semiconductor fabrication plants constructed—all jobs that require Caterpillar's equipment.
The company has become an indirect way to invest in the AI boom, benefiting from the billions of dollars hyperscalers and governments continue to pour into new data centers, power infrastructure and semiconductor manufacturing capacity.
That shift has fueled an extraordinary rally.
Caterpillar shares have surged more than 23% over the past month, nearly 78% year to date and roughly 390% over the past five years, recently climbing to fresh all-time highs. The stock remains well above its key moving averages, with momentum indicators continuing to point higher.
Why Michael Burry Is Watching
That remarkable re-rating may also explain why Caterpillar has landed on Michael Burry's radar.
The investor famous for predicting the 2008 financial crisis recently disclosed a bearish position in the company, alongside shorts against AI heavyweights including Nvidia Corp, Tesla, Inc. (TSLA) and Applied Materials, Inc. (AMAT).
Unlike those names, however, Caterpillar isn't a tech or an AI company in the traditional sense.
Burry's bet suggests he may not be questioning demand for bulldozers. Instead, he could be questioning how much of today's AI-driven construction boom has already been priced into the stock.
As AI enthusiasm spreads beyond chipmakers to companies supplying the infrastructure behind the industry, investors have begun assigning premium multiples to businesses that historically traded like cyclical industrials.
More Than Machinery
Caterpillar's valuation tells a broader story about the evolution of the AI trade.
The market has already rewarded chip designers, semiconductor equipment makers and networking companies. Now, investors appear to be extending that enthusiasm to the companies laying the physical foundations of the AI economy.
Whether that premium proves justified will likely depend on one question: Can today's unprecedented wave of data center and semiconductor investment continue long enough to support valuations that increasingly resemble those of technology companies?
For now, Wall Street appears to believe the answer is yes.
Burry, on the other hand, seems to be betting that when a century-old maker of bulldozers starts trading richer than Nvidia, the AI trade may have reached one of its most unexpected extremes.
