Deere Lifts Its 2026 Outlook by $250 Million as Data-Center Construction Fills Order Books

Deere & Co., the Moline, Illinois-based maker of tractors, bulldozers and other equipment, has increased its 2026 guidance by $250 million, raising the floor of its full-year outlook from $4.5 billion to $4.75 billion, driven by positive order trends in its construction and forestry division as data-center and large infrastructure projects support demand in the United States.

Order books full, production below demand

Christopher Seibert (Christopher Seibert), director of investor relations at Deere, said on an earnings call that the company's order books for construction equipment are largely full for 2026, with customer backlogs extending into fiscal 2027. "While we have increased production rates across our construction factories, continued order strength and retail momentum now have us producing modestly below retail demand," Seibert said. Orders for bulldozers, excavators and other earth-moving equipment are largely booked for the rest of the year.

The construction and forestry unit saw sales increase 18% to $3.6 billion during the quarter that ended August 2, while segment profit surged 84% to $436 million. Deere expects the construction equipment industry to grow 5% to 10% this year, according to its latest market forecast.

SmartGrade as a demand amplifier

Seibert also noted "strong momentum" for SmartGrade, a 3D grade-control system that automates processes for bulldozers, with adoption up more than 50% year to date - a signal that precision attachments are becoming part of the equipment purchase decision rather than an afterthought.

Two-speed company: construction up, big ag down

The raise came despite weakness in Deere's largest segment. Production and precision agriculture, which comprises large tractors and combines, generated quarterly sales of nearly $4 billion, down 6%, with segment profit of $527 million, down 9%. Deanna Kovar (Deanna Kovar), president of the worldwide agriculture and turf division for production and precision, said farmers in South America and Europe faced elevated input costs and higher interest rates; North America was relatively stable but soft.

The small agriculture and turf division - lawn mowers, golf-course maintenance equipment - moved the other way: sales rose 12% to nearly $3.4 billion and segment profit jumped 28% to $622 million, helped by stronger cash flow at dairy and livestock customers and by turf recovery after several years of inventory and demand adjustments.

Tariff refunds flattered the quarter

Assembly bay of a construction equipment factory running below retail demand amid strong orders

Deere recognized $110 million of International Emergency Economic Powers Act (IEEPA) tariff refunds during the third quarter, benefiting mainly small agriculture and turf.
Year to date the company has received $382 million in refunds.
Deere assumes no further refunds for the rest of the fiscal year ending November 1, 2026.

What to watch next

The forestry picture remains the soft spot: Deere is bracing for the global forestry industry to be down 10%, which investor relations manager Dan Pulley (Dan Pulley) attributed to subdued residential construction activity and softer log and lumber prices in North America. On agriculture, CFO Brent Norwood (Brent Norwood) framed the cycle for investors: "The agricultural environment remains challenging, but we continue to believe that 2026 represents the bottom of the ag equipment cycle. While the recovery is likely to be measured and is expected to vary by region, the underlying trends are moving in the right direction," he said, as reported by Manufacturing Dive. The radar question for the quarters ahead is whether data-center earthworks can keep offsetting the farm-cycle trough while production stays modestly below retail demand.