Generac Holdings shares surged more than 40% in after-hours trading on Wednesday following the announcement of a significant long-term agreement to supply backup generators to Amazon data centres.
Generac will initially supply backup power generators for Amazon’s data-centre operations, with deliveries expected to total approximately $2.4 billion in 2027 and 2028. This agreement highlights the increasing demand for reliable electricity and backup generation as Amazon expands its data-centre infrastructure to support cloud computing and AI workloads.
The agreement includes a warrant issued to an Amazon subsidiary to purchase up to 1.69 million GNRC shares at $200.9266 each. Of these, about 307,954 shares vested immediately, with the remainder tied to future generator purchases. This strategic move underscores the growing importance of data centres as a source of demand for Generac.
Generac has been actively expanding its commercial and industrial business, identifying data-centre sales as a major long-term growth opportunity. The company had previously reported a $1.6 billion data-centre backlog, indicating a robust pipeline of future projects.
The Amazon agreement positions Generac at the intersection of AI, data centres, and power infrastructure, offering substantial growth potential. Investors will closely monitor the pace of deliveries, future Amazon purchases, and how swiftly Generac can convert the agreement into revenue.
Background
With the data-centre industry rapidly expanding, Generac's partnership with Amazon could significantly enhance its market position.
Observers will be keen to see how this deal influences Generac's financial performance and market strategy moving forward.
