Deere’s AI Bet Is Taking Shape While Farmers Wait For The Cycle To Turn

Deere & Company is entering the final stretch of fiscal 2026 with its businesses moving in different directions.

Its Production & Precision Agriculture business remains under pressure as farmers contend with input costs, commodity-price volatility and uncertainty around crop demand. Construction & Forestry, meanwhile, is benefiting from infrastructure, energy and data-center projects, while Deere's precision-agriculture technology is seeing higher adoption.

The contrast was visible in Deere's third-quarter results on August 20. Worldwide net sales and revenues rose 5% to $12.608 billion, while net income increased to $1.379 billion from $1.289 billion a year earlier. Deere also raised its fiscal 2026 net income outlook to $4.75 billion - $5 billion. 

Read more: Deere’s AI Business Is Growing Even as Farm Equipment Demand Weakens

The company expects large agricultural equipment sales in the U.S. and Canada to decline 15%-20% for the year. At the same time, it expects construction equipment sales in those markets to increase 5%-10%.

AI Is Moving Deeper Into Deere’s Equipment

Deere's agricultural technology business is expanding even as customers remain cautious about buying large machines.

On the third-quarter earnings call, Deanna Kovar, President of Worldwide Agriculture & Turf Division, Production & Precision Ag, and Sales and Marketing, said early order programs for planters and sprayers were running ahead of the previous year. Orders were up mid-single digits at the time of the call, even though the programs had not yet closed.

Deere expects factory adoption of See & Spray to nearly double, with the system included on about one-third of North American sprayers on order for model year 2027.

See & Spray uses cameras and onboard processing to identify weeds and activate individual spray nozzles where needed. Deere reported that customers used the technology across more than 5 million acres during the 2025 growing season and reduced non-residual herbicide use by nearly 50% on average.

The company is also expanding the digital system around its machines. Deere said its John Deere Operations Center now covers more than 520 million engaged acres across nearly 1.2 million connected machines. More than 190 million acres are highly engaged, while more than 450,000 unique active monthly users are using its digital tools.

Deere says it plans to add AI-enabled capabilities to Operations Center, using the operational data generated by connected equipment.

The Farm Cycle Is Weak, But Deere Sees A Bottom

Deere expects Production & Precision Agriculture sales to decline about 10% for fiscal 2026, with softer conditions in South America and Europe weighing on the segment. Its operating-margin forecast for the segment is now 11%-12%.

North America is more stable, but Deere describes demand as being at very low levels. Farmers are managing crop margins, cash flow and input costs before committing to major equipment purchases.

Deere expects 2026 to mark the bottom of the current agricultural equipment cycle. Early-order results, healthier dealer inventories and increasing adoption of precision technologies are among the signals supporting that view.

The company says replacement demand is beginning to build as equipment fleets age. It also pointed to record soybean crush and ethanol production as signs of underlying demand for agricultural commodities.

The recovery is expected to be gradual. Deere's executives said improved farm economics will depend on commodity prices, input-cost stability and renewable-fuel demand.

Deere continues to see adoption of precision agriculture technologies while large-equipment demand remains weak.

Deere says seed, fertilizer and crop-protection products account for roughly 70% of a farmer's operating costs. The company says its precision systems can help reduce variable operating costs by optimizing those inputs, with double-digit savings possible when the technologies are deployed as an integrated system.

Data Centers Are Giving Deere Another AI-Era Tailwind

Construction & Forestry sales increased 18% year over year to $3.618 billion in the third quarter. Deere attributed the increase to higher shipment volumes and favorable price realization, while it said U.S. and Canadian construction demand was being supported by large infrastructure projects, data-center construction and energy-related projects.

The company expects Construction & Forestry sales to increase about 20% for the full fiscal year. Its order books are largely full for 2026, with customer backlogs extending into fiscal 2027.

Its Construction & Forestry business supplies equipment for construction activity, and Deere identified data-center construction as one of the sources of current demand.

The construction business is also seeing higher adoption of technology. Factory-installed SmartGrade adoption increased more than 50% year to date, while sales of Deere's job-site safety solutions increased nearly 40% year over year. Deere says these technologies improve productivity, reduce rework and improve safety.

Deere is also expanding its excavator portfolio. The company launched its first Deere-designed excavator models earlier this year and said customer feedback had been positive. Additional models are scheduled to roll out over the next several years.

Agriculture remains under pressure while Construction & Forestry enters fiscal 2027 with customer backlogs extending into the year.

The next test for Deere will come when agricultural equipment demand begins to recover. The company will enter that phase with a larger connected-equipment base, higher adoption of precision technologies and a construction business carrying substantial order visibility.