Amazon Data Center Deal Drives Generac Stock Surge

• Our read: EasyAlpha grades Generac Holdings Inc C against industry peers in the S&P 500, up from E, led by growth while the dividend remains the key watch item.
• The day: The shares surged 18.3% to close at $207.20 after announcing a multi-billion-dollar data center generator supply deal with Amazon.
• Watching: The next scheduled earnings report on Wednesday, November 4.

The shares surged 18.3% on Thursday, September 17, marking the largest daily gain over the past year as trading volume reached 8.2x the 20-session average. The rally followed the company's disclosure of a long-term supply agreement with Amazon to provide backup power generators for hyperscale data centers. Under the agreement, initial generator deliveries are valued at $2.4 billion.

Alongside the commercial supply pact, the agreement includes an equity component where Amazon receives warrants to acquire a stake in Generac. The arrangement links additional warrant vesting to commercial milestones, which could reach up to $8 billion in cumulative payments as the retailer expands its data center footprint. The partnership provides long-term order visibility for Generac in the hyperscale backup power market.

The Amazon contract expands the order book, but EasyAlpha grades the company C against its industry peers in the S&P 500. That grade reflects average overall quality, representing an improvement after the rating rose from E. Companies graded A or B have stronger fundamentals and historically have carried a lower risk of large drawdowns than companies graded D or E, while C represents average quality where most peers land. The business looks strongest in growth, with quarterly revenue reaching +10.6% year over year.

At Thursday's close of $207.20, Generac trades at a trailing price-to-earnings ratio of 40.6 and a forward price-to-earnings ratio of 15.1, alongside a profit margin of 5.8%. The stock sits 30.1% below its 52-week high, while performance stands at +51.9% so far this year. Among the 21 analysts covering the company, 66.7% rate the stock a buy, with an average price target that sits 37.0% above Thursday's close.