Generac Data Centers Fuelled by $2.4B Amazon Deal

Generac Holdings Inc.'s data center business is gaining momentum after it secured an order from Amazon, valued at $2.4 billion across 2027 and 2028. This deal adds to Generac's existing backlog of $1.6 billion in July, making the company a significant player in the hyperscale market.

The agreement with Amazon has given Generac two major hyperscale customers, which is expected to boost its data center sales. As a result, Commercial & Industrial (C&I) margins are improving, a trend that analysts consider more important than the revenue headline or disappointing residential business performance.

However, there is a potential risk for shareholders: Amazon's warrant of up to $8 billion could dilute their stakes as purchases increase. Analysts are cautiously optimistic about Generac's prospects but are monitoring whether it can fulfill its order book without supplier delays or the hyperscalers entering a capital expenditure (CapEx) digestion phase.