Generac Holdings Inc. (NYSE: GNRC) rallied roughly 33% in premarket trading after disclosing a long-term supply agreement with Amazon.com Inc. (NASDAQ: AMZN) to provide backup power generators for the technology giant’s global data center network, according to a regulatory filing. The pact marks a major win for the power equipment maker as it expands into AI-driven infrastructure markets.
Under the agreement covering Amazon and its global affiliates, Generac’s generators will serve as backup power systems to sustain data center operations during grid failures or power disruptions. The initial delivery phase spans 2027 and 2028, with an estimated $2.4 billion in committed generator shipments. As Amazon continues scaling its data center footprint to support booming demand for artificial intelligence and cloud services, total payments to Generac over the contract term could reach as high as $8 billion.
As an integral component of the transaction, Generac granted an Amazon subsidiary a warrant to purchase up to 1.69 million shares of its common stock at an exercise price of $200.9266 per share. Approximately 307,954 of the warrant shares vested immediately upon closing. The remaining shares will vest incrementally as Amazon remits payments for generator orders, with full vesting subject to the partnership hitting the $8 billion payment ceiling. The warrant is valid through September 16, 2033, and Amazon may settle exercise via either cash payment or a cashless transaction. The structure aligns both companies’ economic interests, giving Amazon a potential equity stake in Generac tied directly to the growth of the supply relationship.
Wall Street analysts broadly cheered the deal’s size and strategic implications, citing meaningful upside to Generac’s earnings trajectory.
Christine Cho, an analyst at Barclays, reiterated her Equal Weight rating on Generac and a $278 price target. She pointed out that the Amazon agreement follows a separate supply deal with a second hyperscale cloud provider announced in July, and that the larger-than-expected scale of the contract underpins the tripling of manufacturing capacity the company flagged on its most recent earnings call.
Christina Feehery of Bloomberg Intelligence said the long-term Amazon deal holds substantial upside for profit growth. Her analysis indicates the agreement could push Generac’s 2027 earnings per share 15% above current market expectations. While the warrant will create some share dilution, Feehery noted that the earnings boost should outweigh the dilutive effect provided deliveries exceed $1 billion next year.
Mark Strouse at JPMorgan, who carries an Overweight rating on the stock, described the deal size as encouraging. With a strengthened order backlog now secured, he said investor focus will shift to updates on Generac’s ongoing capacity expansion efforts to support fiscal 2027 deliveries.
Long known as a leader in residential standby generators — a business exposed to demand swings from extreme weather, power outage events and housing market cycles — Generac has now landed a landmark commercial and industrial customer. The deal solidifies its entry into the rapidly expanding data center infrastructure sector, where robust backup power is a non-negotiable requirement for AI and cloud computing facilities. The partnership adds a high-visibility, secular growth lever to Generac’s revenue profile, reducing its historical reliance on cyclical residential demand.
The steep premarket share gain reflects both the near-term earnings support from the $2.4 billion initial order and a broader market repricing of Generac’s long-term franchise value as a key supplier to power-hungry AI data centers.
