AI Infrastructure Boom Fuels Surge in Deere & Company Construction Orders

Deere & Company (NYSE: DE) has emerged as an unexpected beneficiary of the artificial intelligence build-out, reporting first-quarter revenue of $9.6 billion, significantly exceeding analyst expectations of $7.6 billion. While the company is traditionally viewed as an agricultural powerhouse, its Construction and Forestry (C&F) division has become a primary growth engine. The C&F segment saw 34% year-over-year revenue growth, fueled by a 50% increase in the order backlog. This surge is attributed to hyperscalers such as Amazon, Microsoft, and Alphabet, which require massive expansions of physical infrastructure to support AI, driving demand for Deere's excavators and wheel loaders. This industrial momentum is offsetting a prolonged slump in the agricultural sector. Following a peak in U.S. net farm income in 2022, revenue fell 25% to approximately $46 billion in 2025. Used equipment prices for high-horsepower tractors plummeted over 40% from their peak, though management indicates the agricultural cycle is bottoming this year. Despite an estimated $1.2 billion in annual tariff-related costs that compressed Q1 operating margins to 5.1%, Deere raised its full-year earnings guidance to between $4.5 billion and $5.0 billion. The company also increased its operating cash flow projection by $500 million. The stock currently trades at over 32 times forward earnings, a significant premium compared to its five-year average of 17 times. This valuation suggests that the market is re-rating Deere not merely as a cyclical farm equipment manufacturer, but as an essential supplier to the global AI infrastructure build-out.