Generac Holdings (NYSE: GNRC) shares surged in after-hours trading Wednesday after the backup-power equipment maker unveiled a landmark, long-term supply agreement with Amazon.com to provide generators for Amazon’s data center operations.
Shares have surging 42% in extended trading as investors digested the scale of the deal.
Under the terms of the agreement, Generac will supply backup generators to Amazon with total payments to the company reaching as much as $8 billion over the life of the contract.
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Initial deliveries are expected to be worth roughly $2.4 billion, spread across 2027 and 2028, giving Generac a multi-year revenue runway tied to the explosive growth in data center capacity driven by artificial intelligence and cloud computing demand.
As part of the transaction, Generac also issued a warrant to Amazon.com NV Investment Holdings LLC, a wholly owned Amazon subsidiary, giving it the right to acquire up to 1,693,745 shares of Generac common stock at an exercise price of $200.93 per share.
Of that total, 307,954 shares vested immediately, while the remainder will vest in tranches tied to the cumulative gross payments Generac and its affiliates receive from Amazon for the generators.
The deal marks a significant strategic pivot for Generac, historically known for residential and commercial standby generators, into the fast-growing market for mission-critical backup power at hyperscale data centers.
Data center operators have been racing to secure reliable power infrastructure as electricity demand from AI workloads strains grid capacity, making long-term supply agreements with established generator manufacturers increasingly valuable.
Investors will be watching for further details on margins and delivery timelines when Generac next reports results.
