Generac Signs $2.4B Amazon Backup Power Deal
Generac secured a multi-year supply contract with Amazon worth $2.4 billion, expanding its role in critical data center infrastructure.
Key points
- Generac signed a deal with Amazon for $2.4 billion in generator deliveries scheduled for 2027 and 2028.
- The company issued a warrant allowing Amazon to buy 1.69 million shares at $200.93 per share.
- Generac will invest $250 million by 2027 to expand manufacturing capacity for data center demand.
Generac Holdings (NYSE:GNRC) has locked in a long-term supply agreement with Amazon to provide backup generators for its data centers. The contract guarantees approximately $2.4 billion in deliveries during 2027 and 2028, marking a significant expansion of Generac’s revenue base beyond traditional residential and commercial markets.
As part of the deal structure, Generac issued a warrant to Amazon NV Investment Holdings. This instrument allows Amazon to purchase up to 1.69 million shares of Generac common stock at a fixed exercise price of $200.93 per share, creating a direct equity link between the two companies.
Data Center Backlog Expansion
The Amazon contract builds on existing demand in Generac’s data center segment. Prior to this announcement, the company reported a backlog of $1.6 billion for data center products, excluding committed volumes from another hyperscale customer. The new agreement adds a substantial layer of visibility to this growing revenue stream.
Generac is actively scaling its production capabilities to meet this increased demand. The company plans to invest approximately $250 million through the end of 2027 to expand manufacturing capacity, ensuring it can deliver the required hardware for hyperscale infrastructure projects.
Equity Linkage and Vesting Terms
The warrant component of the deal introduces a performance-based equity mechanism. Additional shares are designed to vest as cumulative gross payments from Amazon and its affiliates increase. The vesting schedule extends up to $8 billion in aggregate payments, though this figure represents a potential ceiling rather than contracted revenue.
According to Yahoo Finance, this structure aligns Generac’s shareholder interests with the long-term success of Amazon’s infrastructure expansion. It differentiates the current $2.4 billion commitment from the broader potential of the relationship over time.
Market Reaction and Analyst Views
Generac shares rose following the announcement as investors reassessed the company’s positioning in the AI infrastructure sector. Cantor Fitzgerald reiterated its Overweight rating on the stock, maintaining a price target of $333. The firm cited the agreement as a central disclosure supporting the investment thesis for Generac’s transition into a key infrastructure supplier.
