Generac Holdings Inc. (GNRC) shares jumped significantly, rising over 19% in Thursday's midday trading to nearly $209, following the announcement of a substantial deal with Amazon.com Inc. (AMZN). The agreement involves Generac supplying backup generators for Amazon's data centers, with initial deliveries expected to total $2.4 billion in 2027 and 2028. This deal is part of a broader long-term arrangement that could see Generac supply up to $8 billion worth of generators.
As part of the agreement, Generac issued a warrant to Amazon.com NV Investment Holdings, allowing Amazon to acquire up to 1.69 million shares of Generac stock at $200.93 per share. Approximately 307,954 shares vested immediately, with the remaining shares vesting in tranches tied to Amazon's future purchases, up to the $8 billion aggregate payment. This structure ties Amazon's stake directly to the success and continuation of the supply deal.
Wall Street analysts reacted positively to the news, with many issuing buy ratings and raising price targets for Generac stock. For example, William Blair called the deal a "massive win," noting that the $2.4 billion in expected Amazon spending for 2027 and 2028 is a significant amount compared to Generac's total company revenue of $4.2 billion in 2025. Baird analysts identified Generac as a "top idea" with a price target of $305. Citi analyst Vikram Bagri acknowledged the deal was "substantially larger than expected" but suggested the after-hours reaction, which saw the stock surge over 30%, might reflect an aggressive valuation at roughly 15x the implied annual revenue from the deal. Other firms like Stephens, Canaccord Genuity, Stifel, Jefferies, Wells Fargo, and Cantor Fitzgerald also held positive ratings on Generac.
This agreement highlights the increasing demand for power equipment driven by the expansion of artificial intelligence and the need for robust data center infrastructure. The deal provides strong visibility for Generac's future revenue, with an indication of $8 billion in spending over seven years, at a time when there are questions about the durability of capital spending trends in the data center industry. Generac's stock has risen over 60% since the beginning of the year, with Amazon shares also gaining about 9% in 2026.
