A 190-Year-Old American Icon Enters the AI Age

Wall Street loves searching for the next artificial intelligence wonder stock.

Investors chase young companies promising to transform entire industries almost overnight. Many have exciting technology, enormous ambitions, and very little proven success.

Yet some of the greatest opportunities come from a different direction.

Established businesses can use new technology to improve products that customers already need. They bring trusted brands, loyal customers, extensive data, and powerful distribution networks.

That combination can turn technological change into lasting profits.

We added Deere & Company (DE) to the American Prosperity Report portfolio in December 2023.

A major part of our thesis involved Deere’s technological transformation.

Deere was no longer simply selling tractors, combines, and construction equipment. It was building an intelligent agricultural platform around its machines.

That transformation is now taking another important step.

Deere recently introduced JD, a conversational artificial intelligence assistant for farmers. It works much like ChatGPT, but focuses entirely on running a farm.

Farmers can ask JD about planting, harvesting, fertilizing, and equipment use. The assistant studies information collected from their individual farms.

That information can include decades of field results, machine performance, and crop yields. JD then turns those enormous datasets into practical answers.

This development represents something far bigger than another corporate chatbot.

John Deere began in 1837 with a revolutionary steel plow. The company has operated for nearly 190 years by solving farmers’ problems.

Now, Deere is applying that same philosophy to artificial intelligence.

Its machines already collect tremendous amounts of information during daily operations. That data becomes more valuable when farmers can understand and apply it quickly.

Deere has approximately 1.2 million machines connected to its Operations Center. The company aims to reach 1.5 million connected machines this year.

Every connected machine strengthens Deere’s relationship with its customers. Each season provides more information about fields, crops, weather, and equipment performance.

That creates a powerful advantage for an established industry leader.

A young technology company might develop an impressive agricultural chatbot. However, it would lack Deere’s machines, customers, dealers, and operating history.

Deere already sits inside the farmer’s daily workflow.

JD connects that trusted position with the latest artificial intelligence capabilities. Deere says farmers retain control over their information and sharing decisions. 

That promise matters because agricultural information can be extremely valuable and personal.

Deere is offering JD without charge through its Operations Center.

That decision might appear surprising for a company seeking software revenue. However, the strategy makes excellent business sense.

Deere wants farmers to experience the benefits before purchasing additional technology. Successful results can encourage customers to upgrade machines or purchase subscription software.

The financial value for farmers can become substantial.

One Iowa farmer reduced corn seed usage from 34,000 seeds per acre to 29,000. He also reduced fertilizer usage by approximately 40% per acre.

Another farmer uses Deere’s smart sprayer across his 6,500-acre operation. The system identifies weeds through cameras and artificial intelligence.

Instead of spraying the entire field, the machine targets individual weeds. He estimates annual herbicide savings of approximately $75,000 after software costs.

Those savings demonstrate why Deere’s technology can become increasingly valuable.

Farmers operate businesses with narrow margins and constantly changing conditions. Lower seed, fertilizer, herbicide, and labor costs can materially improve their results.

Deere benefits when customers see measurable returns from its technology.

The company can sell more advanced equipment, software subscriptions, and precision agriculture upgrades. Its customers become more productive while Deere creates additional recurring revenue.

This opportunity becomes especially important during a difficult agricultural equipment cycle.

Lower crop prices have pressured farmers’ incomes and reduced equipment purchases. Deere cannot control commodity prices or agricultural cycles.

However, it can make its equipment more valuable during every cycle.

That is exactly what high-quality businesses do.

They continue investing during difficult periods while weaker competitors pull back. They improve customer outcomes and strengthen their competitive advantages.

Deere’s JD assistant could help farmers gain more value from existing equipment. Over time, that experience could support future machinery and software purchases.

The financial benefits will not appear immediately or move in a straight line. Agricultural spending remains cyclical, while farmers need evidence before adopting expensive technology.

However, Deere possesses the resources and relationships required for patient execution.

Its global dealer network provides sales, financing, service, parts, and customer support. Its installed equipment base provides valuable data and direct customer access.

Artificial intelligence makes those existing advantages even more powerful.

At the American Prosperity Report, we do not need every emerging technology winner.

We seek exceptional businesses with capable management teams and durable competitive advantages. Those companies must possess strong growth prospects and attractive long-term economics.

Finally, we insist upon buying shares at sensible prices.

Deere matched that approach when we added it in December 2023. We saw a trusted American company evolving far beyond traditional machinery.

Its precision agriculture technology was becoming more important across the farming economy. Artificial intelligence could make that technology easier and more valuable for customers.

JD strengthens that original investment thesis.

Deere does not need to replace ChatGPT or build advanced computer chips. It simply needs to apply artificial intelligence better than agricultural competitors.

That practical approach can produce meaningful results for farmers and shareholders.

America’s economic strength has always come from businesses willing to adapt. Our greatest companies remain successful because they never stop improving.

John Deere transformed farming with a steel plow in 1837. Today, the company is transforming farm data into better business decisions.

That is American innovation at its best.

Investors do not always need the newest artificial intelligence wonder stock. Sometimes, the better opportunity has been compounding its advantages for generations.

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Regards,

Charles Mizrahi
Prosperity Insider