Generac Holdings said Wednesday that it had reached a long-term supply arrangement with Amazon to provide backup generators for the company’s data centers. Initial deliveries scheduled for 2027 and 2028 are valued at about $2.4 billion, while the potential total value of the agreement could reach as much as $8 billion if later arrangements are completed. Generac shares rose 33% in after-hours trading, putting renewed focus on the company’s opportunity in data-center power infrastructure.
Initial deliveries valued at $2.4 billion
Under the agreement, Generac will supply backup generators designed for Amazon data centers. The first deliveries are scheduled for 2027 and 2028 and have a combined value of approximately $2.4 billion. The agreement’s potential value could reach $8 billion, but the final amount depends on subsequent delivery and payment arrangements. That figure does not represent fully confirmed sales revenue at this stage.
Amazon will also receive warrants to purchase Generac shares as part of the arrangement. The warrants cover up to 1.69 million Generac shares at an exercise price of $200.93 per share. Warrants covering 307,954 shares can be exercised immediately, while the rights to purchase the remaining shares will vest progressively as Amazon pays for the generators.
Data-center demand drives power-equipment orders
Data centers must operate continuously and have little tolerance for interruptions in electricity supply. As artificial-intelligence applications drive the expansion of computing facilities, reliable power and backup-generation equipment have become central to data-center construction. Constraints on electricity availability have also increased attention on orders for generators and related equipment.
Generac has historically focused on generators for residential and commercial customers. In recent years, the company has expanded toward larger power-demand applications, including data centers. The scale of the Amazon arrangement indicates that large cloud customers could become a more significant part of Generac’s business mix. The timing of deliveries, when orders are recorded, and the deal’s eventual contribution to profit will depend on subsequent disclosures.
Generac reverses sharply after the announcement
Generac shares gained 33% after Wednesday’s close and were on track to move back above their major moving averages and closer to a 52-week high. Earlier in the regular session, the stock had fallen to a seven-month low before reversing sharply after the agreement was announced.
Amazon shares edged higher after hours, following a decline of about 1% during Wednesday’s regular session that left them at their lowest close since late July. For Amazon, the warrant arrangement links the company to a long-term delivery program with a backup-power supplier. For Generac, investors are focused on whether the data-center orders translate into sustained revenue and capacity requirements.