John Deere's Automation Edge: Why Dismissing This Agricultural Leader Is a Mistake

When evaluating agricultural companies, many investors mistakenly overlook the transformative power of technology in reshaping farming’s future. While traditional analysis focuses on commodities and chemicals, the real disruption is happening in the automation and AI space. Deere & Company stands at the center of this revolution, while its competitors face an uncertain path forward.

Consider this backdrop: in the 1700s, approximately 80% of the American population consisted of farmers. Today, fewer than 2% do agricultural work—yet they feed a vastly larger global population than ever before. Modern machinery and technology have made this paradox possible. But the agricultural innovation cycle is far from complete. In fact, we’re entering a critical phase where artificial intelligence and automation will fundamentally reshape how farming operates.

The Smart Farm Revolution: Deere’s AI-Powered Transformation

John Deere, now 189 years old, continues its reign as the agricultural equipment leader. The company’s iconic prancing stag logo appears on everything from riding lawn mowers to massive combine harvesters, and its product portfolio has recently expanded into digital tools—equipment management software, satellite imaging, and crucially, intelligent automation systems.

The company’s smart sprayer technology demonstrates the potential of AI in farming. Using 36 cameras and machine learning algorithms, these systems identify individual weeds with precision and spray them selectively, rather than blanketing entire fields with chemicals. Testing across 1 million acres in 2023 yielded remarkable results: a 50% reduction in water and chemical usage, an 87% decrease in airborne chemical drift, and a 93% reduction in chemical runoff into waterways. For farmers, this translates to lower input costs. For the environment, it means significantly less pollution.

Complementing this technology, Deere has an autonomous tractor in field testing. Equipped with 360-degree cameras and sophisticated processing, it navigates fields while avoiding obstacles, all under remote monitoring by the farmer. As Deanna Kovar, Deere’s president of Worldwide Agriculture & Turf for Europe, Asia, and Africa, explained: “All farmers need to do is transport their tractor to the field, get it set, get out of the cab, and use their mobile phone to ‘swipe to farm.’” This shift frees farmers from repetitive labor and allows them to focus on broader farm management decisions.

From a financial perspective, Deere proved resilient despite a challenging 2025. Full-year net sales declined 12%, and net income fell 29%—largely attributable to the company’s aggressive research and development spending, which reached $2.29 billion (5.1% of sales) over the past four years. Despite these investments, the company maintained an 11% net income margin. More tellingly, Q4 2025 showed a 11% increase in net sales and revenue, signaling momentum heading into 2026. The company also increased its dividend by 113% since 2020, reflecting confidence in long-term prospects.

Chemical Industry Faces Disruption: FMC’s Struggling Position

The flip side of Deere’s technological advancement is bad news for chemical manufacturers. FMC Corporation, which develops and produces pesticides, fungicides, and crop-protection chemicals, faces an existential challenge as Deere’s automation reduces the need for these products.

FMC’s recent financial performance illustrates the severity of its predicament. In Q3 2025, the company reported a 49% revenue collapse—falling from just over $1 billion to $542 million. Net income swung from a $66 million profit in Q3 2024 to a $569 million loss in Q3 2025. Earnings per share plummeted from $0.52 to a loss of $4.52 per share. The outlook for free cash flow is equally grim: FMC projected a $100 million FCF loss for 2025, compared to $614 million positive FCF at the end of 2024.

This deterioration occurred precisely as Deere’s smart sprayers are being deployed on real farms—technology designed to cut pesticide use by half. The timing couldn’t be worse for FMC, which lacks a clear pathway to reverse its decline in an era of precision agriculture.

Feeding 10 Billion: Why Automation Matters

The global context amplifies Deere’s strategic importance. The world population is projected to reach 10 billion by 2050. To feed this expanded population, agricultural production must increase 60-70% from current levels. This cannot be achieved by simply expanding farmland; instead, efficiency through automation and intelligent systems is essential.

Deere’s nearly 200-year history as a partner to farmers positions it uniquely to lead this transformation. The company has the manufacturing capability, market trust, and now the technological sophistication to drive the next agricultural revolution. While facing near-term challenges, the long-term tailwinds are substantial.

The Investment Case for Deere vs. Competitors

Comparing Deere and FMC reveals a stark divergence in fortune. One company is investing heavily in the future and seeing early results; the other is being disrupted by the same technological forces and lacks a viable response.

For investors evaluating agricultural exposure, the choice seems clear. Deere’s leadership in AI, automation, and precision agriculture positions it to capture value as farming modernizes globally. FMC, by contrast, is trapped in a declining market for a commodity product that automation specifically targets.

Rather than dismissing the potential of well-established leaders undergoing technological transformation, savvy investors should recognize when legacy companies successfully embrace innovation. Deere represents exactly that opportunity—a company with deep industry roots, substantial R&D commitment, and early evidence that its innovations work. The automation revolution in agriculture is just beginning, and Deere is positioned to lead it into the next decade.