The Hidden Backdoor to AI Gains: Why Self-Driving Farm Equipment Matters

Most investors chasing AI are looking in all the wrong places. They’re fixated on whether Meta Platforms (META) and Microsoft (MSFT) are overextending themselves, or whether OpenAI will become the next Netscape—questions that miss the forest for the trees. These debates distract from what truly matters: where AI will actually generate profits right now, not speculative gains five years down the line.

The real backdoor to AI returns isn’t in Silicon Valley. It’s in places no one talks about at cocktail parties: insurance, healthcare, and agriculture. And if you’re looking for a legitimate AI play that’s already showing results—one that Wall Street has somehow overlooked—agriculture is where the magic is happening.

AI Investment’s Blind Spot—And Where Real Money Is Going

The traditional tech narrative has reached saturation. Investors are skating to where the puck was, not where it’s going. Everyone’s debating whether Big Tech is justified in its capital expenditures. Nobody’s asking the more important question: where is AI actually working right now, generating revenue and profits?

Here’s what forward-thinking investors understand: In any economic cycle, people must eat. Farmers must plant, spray, and harvest. The companies that provide these essentials aren’t cyclical luxuries—they’re utilities. And right now, those utilities are about to be radically reshaped by technology in ways that Wall Street hasn’t priced in yet.

Yes, unemployment numbers are rising—but that’s not a recession signal. It’s evidence that businesses are successfully automating work through AI tools. And you know who desperately wants exactly that? Agricultural businesses operating on thin margins. Fewer workers doing exponentially more work is the dream scenario for farming operations.

This is where Deere & Co. (DE) enters the picture.

Deere’s Autonomous Revolution: More Feasible Than Self-Driving Cars

We’ve held this stock in our portfolio since October 2024, and it’s delivered solid returns as the company continues to prove out its AI and autonomy thesis. While everyone’s fixated on self-driving cars navigating chaotic urban environments, Deere is solving a much simpler—and therefore much more solvable—problem: self-driving tractors.

Think about the difference. A self-driving car must contend with pedestrians, cyclists, unpredictable intersections, and construction zones. It’s a chaos-management problem. A tractor, by contrast, operates in structured patterns—tilling, planting, spraying, and harvesting across predictable grid-like fields. That’s a fundamentally easier automation challenge, especially when you’re deploying advanced AI to manage the decision-making.

Deere already has “autonomy-ready” models available, with upgrade kits for existing equipment. Orders for autonomous tillage machines are opening soon, and similar technology is rolling out across the company’s product lineup. But here’s what makes this a legitimate backdoor AI play: the company isn’t just building autonomous hardware. It’s building software platforms and AI systems that farmers increasingly depend on.

Smart sprayers, for instance, use cameras and AI-powered vision systems to identify weeds with remarkable precision, then spray them directly. According to Deere’s internal testing, this approach cuts herbicide usage by up to two-thirds compared to traditional blanket spraying. That means farmers save money, protect the environment, and improve yields simultaneously.

Tech-Powered “Stickiness”: How Farmers Get Locked Into the Platform

Here’s why this matters for investors: these products create what investors call “stickiness.” Once a farmer adopts Deere’s autonomous systems and AI-powered software platforms, switching to a competitor becomes complicated and costly. You’re not just changing a tractor; you’re abandoning integrated systems, retraining operations, and losing accumulated data advantages. That competitive moat is extraordinarily valuable.

For Deere, this transition represents a fundamental shift in business model—from a traditional cyclical manufacturer to something closer to a tech-driven agricultural utility. Companies that successfully make this transition tend to command premium valuations and more predictable cash flows. That’s exactly what dividend investors should be hunting for.

The Cycle Is Bottoming—Now’s the Time for Cycle-Sensitive Investors

Of course, none of this happens in a vacuum. US agriculture has struggled recently. Corn and wheat prices, tracked by the Teucrium ETFs, have declined meaningfully, and trade tensions haven’t helped. Deere’s stock has borne the brunt of these headwinds.

But here’s what separates contrarian investors from the crowd: we recognize that cyclical downturns are where opportunity lives. During Deere’s recent earnings call, management essentially called the bottom—they’re signaling that 2026 represents the inflection point in the large-ag equipment cycle. They’re not claiming sudden prosperity; they’ve guided for 15-20% declines in US and Canadian large-ag equipment sales to continue. But that’s precisely when experienced investors should be accumulating.

We don’t buy cyclical stocks when farmers are rushing to equipment dealers. We buy when the cycle is in the dumps and sentiment is at its worst. That’s the position we find ourselves in now.

Dividend Safety and Growth: The Financial Foundation

What makes Deere particularly attractive is the intersection of timing and financial strength. The company’s dividend has grown 80% over the past five years—a remarkable compounding story that’s largely been masked by recent market weakness.

More importantly, the dividend is genuinely safe. Deere’s payout ratio stands at a sustainable 53% of free cash flow, meaning there’s room to grow distributions without financial strain. The balance sheet backs this up: approximately $43 billion in net debt (after accounting for cash and short-term investments), representing only 41% of total assets and a modest 28% of market capitalization.

This financial flexibility is crucial. Even if the agricultural recovery unfolds more slowly than management hopes, Deere has the firepower to maintain and grow its dividend while continuing to invest in AI and autonomous systems development.

The “Backdoor” Play Investors Are Still Missing

Here’s the bottom line: Deere represents exactly the kind of investment that flourishes when macro uncertainty runs high. Its products are essential (farmers can’t bypass farming). Its technology is creating lasting competitive advantages. Its dividend is grounded in genuine financial strength. And its valuation reflects ongoing near-term challenges, not the substantial upside that arrives when the cycle turns and investors finally appreciate how AI is transforming agriculture.

Deere isn’t competing on hype or promises. It’s executing right now—deploying real technology that’s generating real value for customers. That’s the definition of a stock positioned to outperform in uncertain times.

The AI story that matters isn’t the one about trillion-dollar companies debating capital allocation in California. It’s the one playing out in the fields of America’s heartland, where a century-old company is quietly becoming an AI and automation powerhouse. That’s the backdoor AI play the broader market is still missing.