The Charts That Show Deere Is Becoming a Tech Company

Revenue is down 24% from the 2023 peak. That's the number the bears focus on — the cyclical downturn in farm equipment demand as commodity prices moderate and farmers defer replacement purchases. It's a valid concern. Equipment cycles typically last 3-4 years peak to trough.

But buried inside the revenue decline is a growing segment that doesn't follow the equipment cycle at all.

Deere's See & Spray technology — which uses computer vision to identify weeds and apply herbicide only where needed — saves farmers 60-70% on chemical costs. Once a farmer has experienced those savings, the subscription isn't optional anymore. It's an operating expense that pays for itself multiple times over.

The same dynamic applies to autonomous tillage, variable-rate seeding, and yield monitoring. These aren't gadgets. They're productivity tools that generate measurable ROI per acre. And they generate revenue every growing season, regardless of whether the farmer buys a new tractor.

Deere has approximately 500,000 connected machines operating globally. Each machine generates agronomic data that feeds the precision agriculture algorithms. The more data Deere collects, the better its models become, the more value the technology delivers, and the harder it becomes for a farmer to switch to a competitor's platform.

This is a textbook network effect applied to agriculture. CNH Industrial and AGCO are attempting to compete with their own precision agriculture platforms, but Deere's data advantage — accumulated over a decade of connected machine deployments — creates a moat that's measured in petabytes, not patents.

At $167 billion market cap and 18x forward earnings, Deere is valued as a pure cyclical industrial. But if you strip out the technology revenue — $4.4 billion growing at 25% with estimated 40%+ margins — and value it at even a conservative 10x revenue, the tech segment alone is worth $44 billion. That's 26% of Deere's entire market cap assigned to a business growing at 25% annually.

The equipment business, at $42 billion in revenue with 16-18% margins, is worth roughly $120-130 billion on a cyclical-through-the-cycle basis. Add the tech segment at $44 billion and you get $164-174 billion — essentially the current market cap. The technology growth is being assigned zero premium. The market is getting the tech transformation for free.