John Deere may be the world's largest manufacturer of agricultural equipment, but another business line is the real reason the company is plowing ahead. On Thursday, Deere reported fiscal third-quarter earnings with revenue climbing 6.2% year over year to $11 billion and income rising 7% to $1.4 billion. Both figures came in ahead of Wall Street forecasts. Deere's fiscal year runs on an off-calendar schedule that ends in late October, so the third quarter covers roughly May through July.

The results showed Deere gaining ground in a new field, as its construction business proved a beneficiary of the AI infrastructure boom. Shares in the company rose 6.94%.

Chatbots Need Dozers, Too

Goldman Sachs expects $1 trillion in AI spending this year, $800 billion of that by US hyperscalers, the giant cloud operators such as Amazon, Microsoft and Alphabet that are pouring capital into data centers. To make it happen, the world is going to need a lot of dump trucks, backhoes, bulldozers and excavators — and Deere has plenty of them. Every data center begins as an earthmoving job, with land cleared and graded before a single server is installed.

The earnings are a testament to how the company is already cashing in. Deere's construction and forestry sales rose 18% to $3.6 billion, gaining ground in a market long anchored by Caterpillar, the world's largest construction equipment maker, and Japan's Komatsu. Investor Relations Director Chris Seibert said on an analyst call that "customer backlogs now extend well into fiscal year 2027."

The AI boom could not have come at a more welcome time, as it offsets a cyclical downturn in Deere's biggest and most famous business line.

Agriculture in a Downturn

Sales at Deere's largest unit, its agriculture division, fell 6.4% year over year in the quarter to $4 billion. Executives said the explanation is simple: Deere booked fewer shipments.

Farm incomes have tumbled from record highs in 2022, a peak fueled by the crop-price surge that followed Russia's invasion of Ukraine, forcing farmers to cut back on capital spending and creating a lull in demand for Deere tractors and harvesters. Most large machinery is bought on credit, and borrowing costs that remain well above the lows of the pandemic era have made financing new equipment more expensive. The war in Iran, which has sent diesel fuel and fertilizer prices soaring this year, has added even more stress to farm budgets.

Full-Year Outlook Points in Two Directions

Deere's full-year industry outlook forecasts large agriculture equipment volumes will fall 15% to 20% this year in the US and Canada, while construction equipment volumes will rise 5% to 10%.

Deere CEO John May said the company thinks 2026 will be the end of the current downcycle in agriculture equipment, saying the manufacturer is "well positioned for long-term value creation." The construction backlog running into fiscal 2027 gives the company committed demand to lean on in the meantime, and whether AI infrastructure spending continues to convert into equipment orders is the main thread to watch alongside the farm cycle.

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This article was first published by The Daily Upside and syndicated by Yahoo Finance on August 21, 2026.