Generac Holdings Inc. GNRC has entered into a major long-term supply agreement with Amazon AMZN, significantly strengthening its position in the rapidly expanding data center infrastructure market. Shares are up 34.5% in premarket trading today.
In a regulatory filing, Generac disclosed that it will supply backup power generators for Amazon data centers, with initial deliveries expected to total $2.4 billion across 2027 and 2028. Generac also issued Amazon.com NV Investment Holdings LLC a warrant to acquire up to 1,693,745 shares of its common stock at an exercise price of $200.9266 per share. Amazon.com NV Investment Holdings LLC is a wholly owned subsidiary of Amazon.
Of the total warrant shares, 307,954 vested immediately. Generac added that the remaining warrant shares will vest in tranches contingent upon aggregate gross payments, net of certain offsets, received by Generac and its affiliates from or on behalf of Amazon and its affiliates for backup power generators, extending up to a total of $8 billion of qualifying payments.
The Amazon agreement adds considerable scale and visibility to a data center business that is fast emerging as Generac’s key growth engine.
Generac Holdings Inc. Revenue (Quarterly)
Generac Holdings Inc. revenue-quarterly | Generac Holdings Inc. Quote
In the second quarter of 2026, the company generated more than $100 million in data center revenues, helping drive a 29% year-over-year increase in Commercial & Industrial segment sales during the quarter. It also secured two multi-year agreements with hyperscale customers.
On the last earnings call, Generac noted that the data center backlog reached $1.6 billion as of July 2026, including roughly $1 billion of new orders received in the prior 90 days, while excluding expected orders from the second hyperscale agreement.
The company is focused on capacity expansion for large megawatt generators to support accelerating demand. Generac is ramping production at existing domestic and international facilities and accelerating the outfitting of its Sussex, WI, facility. Management also acquired the Belvidere, IL, packaging facility, which is expected to be operational in the first quarter of 2027. The Enercon buyout (completed earlier this year) is expected to boost Generac’s vertical integration and support margin expansion for megawatt backup power offerings.
However, data center market expansion brings its own set of concerns. With increasing reliance on this end market, Generac is exposed to cyclical capital spending cycles in AI and data centers. Any delays in manufacturing capacity expansion can also weigh on growth targets. Generac also needs to watch out for increasing competition in the data center space.
Mapping the Competitive Terrain
Cummins CMI is also rapidly expanding its data center footprint. Second-quarter 2026 Power Systems revenues rose 19% to $2.3 billion, supported by strong power-generation demand, particularly from data centers. Cummins is developing a 130-liter natural gas genset for prime power and supplying Circe Energy with QSK60 and HSK78 generators with microgrid technology for a prime power solution supporting a high-performance computing data center in Texas.
The company also signed a multi-year agreement with a global hyperscaler, providing visibility into several gigawatts of future backup-power genset demand. For 2026, Power Systems revenues are expected to grow 14% to 19%. In August, Cummins secured its largest battery energy-storage deployment to date for a major U.S. data-center project.
Caterpillar CAT is also expanding aggressively in data-center power, increasing competitive pressure. In the second quarter of 2026, Caterpillar’s Power & Energy sales reached $8.2 billion, up 17% year over year. Sales to users grew 33% in the Power & Energy segment. Within Power generation, sales to users grew 72%, supported by strong demand for large gensets and turbines used in data center applications.
Caterpillar is also adding capacity, including restarting a 10-MW medium-speed gas reciprocating platform with about 1.5 GW of planned capacity, with shipments expected to commence in the fourth quarter. Management anticipates full-year 2026 growth in power generation for Cat reciprocating engines and Solar Turbines, driven by rising energy demand from cloud computing and generative-AI data-center buildouts.
GNRC Price Performance, Valuation and Estimates
Shares of GNRC have declined 17.3% in the past month while the Manufacturing-General Industrial sector is down 8.3%.
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GNRC is trading at a forward 12-month price/earnings ratio of 15.92X, lower than the sector’s multiple of 20.04X.
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The Zacks Consensus Estimate for GNRC earnings for 2026 has seen an 8.6% upward revision over the past 60 days.
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GNRC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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