Deere's stock is having its best month in 50 years, as the tractor maker rides the AI boom

By Tomi Kilgore

The stock is headed for its eighth record close this year, as construction and turf equipment sales continue to surge

Deere's stock surged further into record territory Thursday after a big earnings beat and a bullish outlook for full-year sales growth.

Shares of Deere are headed for yet another record on Thursday after the maker of tractors and lawn-care equipment blew past fiscal first-quarter earnings expectations, as profits in its construction business more than doubled.

The company also provided a 2026 sales-growth outlook showing each of its business segments outperforming the industries in which they operated - even as profitability in Deere's global large-agriculture business is being hurt by tariffs and higher warranty expenses.

In particular, Deere seemed upbeat about the outlook for its construction business, as the Trump administration's spending on infrastructure projects should help bolster the industry.

Chris Seibert, manager of investor communications, also noted on the post-earnings call with analysts, according to an AlphaSense transcript, that declining interest rates, increased spending on rental equipment and "surging data center construction" - a function of the rapid growth in the use of artificial intelligence - would continue to support the industry.

Deere's stock (DE) rose 11.9% in recent midday trading, heading toward an eighth record close this year and its biggest one-day gain since the 13.4% rally on March 24, 2020.

The stock has run up 25.7% so far in February, which puts it on track for the best monthly performance since record gain of 45.3% in October 1974.

For the quarter to Feb. 1, net income fell 24.5% from a year ago to $656 million. While that marked the ninth straight quarter of year-over-year declines in net income, earnings per share for the quarter of $2.42 was well above the average analyst EPS estimate compiled by FactSet of $2.02.

Total revenue grew 13% to $9.61 billion, beating the FactSet consensus of $9.12 billion.

Deere said sales for its construction and forestry business surged 33.9% to $2.67 billion, beating expectations of $2.34 billion. And operating profit for the business jumped 110.8% to $137 million.

That followed 27% growth in sales the previous quarter, which snapped a six-quarter streak of year-over-year declines.

The small-agriculture and turf business was also booming, with sales rising 24% to $2.17 billion and operating profit jumping 58.1% to $196 million. Deere said that business is benefiting from rising prices for beef, which is boosting profits in the dairy and livestock sector, and from a rebound in the housing market, which is generating demand for turf equipment.

Meanwhile, sales for the production and precision-agriculture business rose just 3% to $3.16 billion, while operating profit dropped 58.9% to $139 million.

For the full fiscal year, Deere forecast revenue for both its construction and forestry and small-ag and turf businesses rising about 15% from the prior year, while analysts are currently modeling for growth of 9.5% and 9.8%, respectively. Production and precision-ag revenue is expected to be down 5% to 10%, compared with analyst projections for a decline of 6.9%.

Deere's growth estimates for its business were above the outlooks for the respective industries, as growth in the global construction and forestry and small-ag and turf markets is seen ranging from flat to up about 5%, while the large-ag market is seen down 15% to 20%.

Deere's stock has run up 30.4% over the past 12 months, while the S&P 500 index SPX has advanced 11.5%.

-Tomi Kilgore

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02-19-26 1223ET