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Caterpillar Hit an All-Time High. Then Burry Shorted It.

Editor July 3, 2026 6 minutes read
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July 3, 2026

Caterpillar Hit an All-Time High. Then Burry Shorted It.

The data tells a more complicated story than either side admits.


A century-old equipment company just became one of the most debated stocks in the market.

Caterpillar hit an all-time closing high of $1,064.90 on June 30, 2026. The stock had surged more than 150% year over year, making it one of the hottest names in the Dow Jones Industrial Average and one of only two components trading above $1,000 a share. Then, on that same day, Michael Burry, the investor who called the 2008 housing collapse, disclosed via his Substack newsletter that he had shorted the stock at $1,060.98, calling it one of the most overvalued AI-linked beneficiaries in the market. The stock dropped as much as 6.65% from its record in the session that followed.

Both things can be true at once. The business is genuinely exceptional right now. And the valuation debate is genuinely real.

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Here’s where I’m at on this.

What most people miss about Caterpillar is that it stopped being just a construction equipment company somewhere along the way, and the Q1 2026 numbers make that clear. Revenue came in at $17.4 billion, up 22% year over year. Adjusted EPS hit $5.54, a 30% jump that crushed the Wall Street consensus of about $4.62 by nearly a full dollar. Management raised full-year 2026 sales and revenue expectations to low double-digit growth.

The standout detail, the one that changes how you should think about this business, is the backlog. Total firm orders reached approximately $63 billion at quarter-end, up 79% from a year earlier. That’s not a seasonal blip. That’s a structural shift in the order book.

What’s driving it: data centers.

Caterpillar makes the engines and turbines that supply both primary and backup power to data center facilities. It builds the electrical infrastructure to run them. It manufactures the excavators and equipment used to break ground on the facilities themselves. CEO Joe Creed said it plainly on the Q1 earnings call: power generation demand for large data center applications surged 48% in sales to users, with the Power and Energy segment posting 32% overall growth in that metric. In response, the company raised its long-term power generation sales target to more than 3x 2024 levels by 2030, and announced plans to nearly triple large reciprocating engine capacity by the same year.

That’s not a hedged, cautious response. That’s management making a multi-year bet on sustained demand.

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Caterpillar also announced a framework agreement with ProPetro’s PROPWR division to supply up to 2.1 gigawatts of power generation assets over five years, representing its sixth publicly announced deal of at least one gigawatt. CEO Creed noted on the earnings call that there are several additional smaller agreements that haven’t been publicly announced. Price target increases from major banks have followed, with JPMorgan at $1,165, Truist at $1,218, and Wells Fargo at $1,155.

And then there’s Burry on the other side, shorting it.

His argument: the AI trade has lifted Caterpillar’s multiple to levels that price in perfection. The stock trades at roughly 53x trailing earnings, against a five-year median closer to 17x. Burry shared a chart showing the price-to-sales ratio climbing to its highest point in at least three decades at the same moment the stock hit record highs. His concern is not that the business is broken. It’s that the market is paying technology-company multiples for a machinery company, and any deceleration in 

Burry disclosed this short through his Substack newsletter, not a regulatory filing. Scion Asset Management deregistered as an investment adviser in late 2025, which eliminated the SEC’s 13F reporting requirement. So the position size is not publicly known, and investors are working from his own commentary rather than verified institutional data.

The tariff headwind is real regardless of who’s right on valuation. Caterpillar put its Q1 2026 tariff impact at about $600 million, better than the $800 million internally estimated, but the full-year 2026 tariff exposure is still projected at $2.2 to $2.4 billion. That’s a meaningful drag on margins that doesn’t disappear if trade tensions persist. And cyclically, the Resource Industries segment, tied to mining and commodities, posted an operating margin of 10% in Q1, down 700 basis points year over year. That’s a wildcard.

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What matters is which force dominates over the next 12 to 18 months: the structural AI infrastructure buildout that keeps the backlog growing, or a valuation compression that catches the stock on the wrong side of sentiment.

At first glance, it reads like a classic great-company, risky-stock situation. But the backlog is forward-looking in a way that quarterly earnings are not. A $63 billion order book up 79% in one year does not happen by accident, and it does not disappear because one famous investor posts a short on Substack. The stock, now trading around $955 after the post-Burry pullback, is still up more than 150% from a year ago.

Next earnings: August 4, 2026. Q2 EPS estimates are running around $6.16, with revenue expected near $19 billion. Watch the Power and Energy segment margin. If it holds while the segment keeps growing, the case that Caterpillar has structurally shifted into a durable power company stays intact. If that margin keeps eroding, tariffs and capacity costs are biting deeper than guided, and a stock at record multiples has the most to lose.

Worth keeping close.

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