Caterpillar (CAT.US) has pulled back nearly 30% from its all-time high as high oil prices and the decline of the AI rally put pressure on industrial stocks.

According to Zhihui Finance APP, Caterpillar (CAT.US) shares are on track for a decline of over 30% from their historical peak. High crude oil prices, rising U.S. Treasury yields, and the cooling off of artificial intelligence (AI) trading logic continue to put pressure on the entire industrial sector.

On Wednesday, the stock fell as much as 4% intraday, touching a low of $742.01. The share price has now dropped about 30% from its record high of $1,064.90 set in late June.

The current downturn coincides with a broad sell-off across chip stocks and AI infrastructure stocks, while the latest inflation data has heightened concerns that the Federal Reserve could raise rates more aggressively than expected.

In recent months, traders have been wary of risks that AI infrastructure assets are “rising too quickly, with valuations overshooting.” Caterpillar’s weakness has echoed the overall volatility seen among power equipment manufacturers, chipmakers, and data center supply chain companies. Since mid-August, oil prices and U.S. Treasury yields have both climbed, further squeezing the performance of industrial stocks.

However, over a longer horizon, Caterpillar has still posted gains of around 40% over the past year, reflecting investors’ confidence in its long-term fundamentals. Ongoing data center construction continues to drive the company’s turbine and engine orders, and the construction machinery division is also maintaining a rapid growth pace.

The market’s focus is now shifting to the earnings report to be released later this month. Jefferies analyst Stephen Volkmann noted that with freight and raw material costs rising, machinery manufacturers in general are facing cost pressures; for Caterpillar to maintain its profit margins, it will increasingly have to rely on volume growth.

“End-user demand in the construction machinery sector remains strong, and business momentum is spreading outward from data centers. But the real concern for investors is whether, amid sustained commodity inflation, price pass-through can cover the costs and whether margins will come under pressure,” Volkmann wrote in this week’s research report.