Baird raised its price target on Caterpillar shares to $1,200 from $1,165. The firm maintained an "Outperform" rating.
Caterpillar stock recently rallied past the $1,000 mark. It closed at an all-time high of $1,057.01 on June 25.
The market increasingly views Caterpillar as a key player in artificial intelligence infrastructure. This is driven by its Power and Energy segment.
The segment supplies turbines for data centers. Recent deals, such as the Chevron-Microsoft power agreement, bolster this narrative. These deals contribute to a record backlog and positive investor sentiment.