We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Generac is a Zacks Rank #1 Strong Buy as data center demand for backup power surges.
GNRC signed an Amazon supply deal with $2.4B in initial generator deliveries set for 2027-28.
Generac's data center backlog hit $1.6B as 2027 EPS estimates climbed 9% over the past 90 days.
When most investors think about the AI buildout, they think about chips, memory and networking gear. But every hyperscale data center needs something far less glamorous to keep the servers running when the grid goes down.
That's where today's Bull of the Day comes in with Zacks Rank #1 (Strong Buy) Generac Holdings (GNRC - Free Report) .
About the Company
Generac is based in Waukesha, Wisconsin, and is valued at $12 billion. The stock has a forward PE of 21 and Zacks Style Scores of "D" in Value, "C" in Growth, and "F" in Momentum.
The company has long been best known for its home standby generator business. That's still a big business, but the company reorganized this year into Residential and Commercial & Industrial segments, and the C&I side is where the story is being written.
That segment includes the large megawatt diesel generators that data centers rely on for backup power, and demand for those units is surging.
Earnings Beat and Raised Guidance
The company blew past expectations with its second quarter report on July 29. Adjusted earnings came in at $2.91 per share, crushing the Zacks Consensus Estimate of $1.95 and up from $1.65 a year ago. Revenue of $1.17 billion was up 11% and roughly in line with the $1.18 billion estimate.
C&I product sales jumped 29% to $556.5 million, while Residential slipped 2%. Gross margin expanded to 44.5% from 39.3%, adjusted EBITDA rose to $290.7 million from $187 million. Free cash flow climbed to $62.9 million from $14.5 million.
About $71 million in tariff refunds helped the quarter, but the underlying momentum in C&I is real.
Management affirmed full-year net sales growth in the mid-to-high teens butchanged the mix underneath it. C&I growth is now expected in the low 30% range, up from mid-to-high 20%. Residential was trimmed to high single digits after second quarter outages ran more than 30% below the long-term baseline.
Data center revenue is now expected to reach nearly $450 million this year, with about $250 million of that coming in the back half. Management expects third quarter sales to grow in the high teens and growth to accelerate further in the fourth quarter as new capacity comes online.
The Data Center Backlog
The data center backlog has grown to about $1.6 billion after roughly $1 billion in new orders in just 90 days. About $1.35 billion of that is scheduled for 2027 delivery, including nearly $700 million from the company's first hyperscale customer.
That backlog doesn't include anything from a second hyperscale agreement signed in June. Management said that the deal should be at least as big as the first one and covers both 2027 and 2028. Management also said it expects to "crush" its Investor Day goal of more than doubling C&I revenue within three years, possibly as early as 2027.
The Amazon Deal
Then came the big one.
On September 16, the company disclosed a long-term supply agreement to provide backup generators for Amazon data centers. Initial deliveries are expected to total $2.4 billion across 2027 and 2028.
As part of the deal, Amazon received a warrant for up to 1.69 million shares at $200.93 per share, or about 2.9% of shares outstanding. Just under 308,000 of those shares vested immediately. The rest vest in tranches as Amazon's generator purchases build toward $8 billion, and the warrant runs through September 2033.
This structure ties Amazon's upside directly to how much equipment it buys. The initial $2.4 billion alone is well above the entire current data center backlog. If purchases approach the $8 billion ceiling, If Amazon's purchases approach the $8 billion threshold, the relationship could become a significant part of Generac's revenue base for years.
Estimates Point Higher
The near-term estimate picture is mixed, but the longer-term trend is strong. The Zacks Consensus Estimate for the current quarter has slipped to $2.39 from $2.52 over the last 60 days. The fourth quarter estimate edged down to $2.64 from $2.68.
The modest trims appear consistent with the softer Residential outlook.
The bigger picture is much better.
The full-year 2026 estimate has climbed to $9.74 from $9.01 over the last 60 days, an 8% increase. Two analysts raised their 2027 forecasts in just the last week, pushing the consensus to $11.92 from $11.49. That's up 9% from $10.91 three months ago and points to 22% earnings growth next year.
None of those numbers yet fully reflects the $2.4 billion Amazon agreement, with initial deliveries scheduled for 2027 and 2028.
GNRC hit a four-year high near $300 earlier this year before the summer selloff knocked the stock into the low $170s.
But when the Amazon news hit the stock surged after hours, moving about $250. The profit takers showed up quickly and knocked the stock back down near the $200 level.
Let’s take a look at the moving averages:
21-Day MA: $211
50-Day MA: $202
200-Day MA: $190
With the stock back near its 50-day moving average and still above its 200-day, the technical setup gives longer-term investors a potential entry point after the initial Amazon-driven spike.
In Summary
The home standby business still pays the bills, but data centers are rewriting Generac's growth profile. A $1.6 billion backlog, a second hyperscale deal not yet included and a new $2.4 billion Amazon agreement give the company unusually strong visibility into future growth.
Now it comes down to execution. Generac has to ramp production fast enough to meet demand without sacrificing margins or running into supply-chain constraints. But with 2027 estimates rising and a Zacks Rank #1 (Strong Buy), this stock offers a very different way to play the AI infrastructure buildout.
View the Zacks #1 Rank List
Bull of the Day: Generac Holdings (GNRC)
Key Takeaways
When most investors think about the AI buildout, they think about chips, memory and networking gear. But every hyperscale data center needs something far less glamorous to keep the servers running when the grid goes down.
That's where today's Bull of the Day comes in with Zacks Rank #1 (Strong Buy) Generac Holdings (GNRC - Free Report) .
About the Company
Generac is based in Waukesha, Wisconsin, and is valued at $12 billion. The stock has a forward PE of 21 and Zacks Style Scores of "D" in Value, "C" in Growth, and "F" in Momentum.
The company has long been best known for its home standby generator business. That's still a big business, but the company reorganized this year into Residential and Commercial & Industrial segments, and the C&I side is where the story is being written.
That segment includes the large megawatt diesel generators that data centers rely on for backup power, and demand for those units is surging.
Earnings Beat and Raised Guidance
The company blew past expectations with its second quarter report on July 29. Adjusted earnings came in at $2.91 per share, crushing the Zacks Consensus Estimate of $1.95 and up from $1.65 a year ago. Revenue of $1.17 billion was up 11% and roughly in line with the $1.18 billion estimate.
C&I product sales jumped 29% to $556.5 million, while Residential slipped 2%. Gross margin expanded to 44.5% from 39.3%, adjusted EBITDA rose to $290.7 million from $187 million. Free cash flow climbed to $62.9 million from $14.5 million.
About $71 million in tariff refunds helped the quarter, but the underlying momentum in C&I is real.
Management affirmed full-year net sales growth in the mid-to-high teens but changed the mix underneath it. C&I growth is now expected in the low 30% range, up from mid-to-high 20%. Residential was trimmed to high single digits after second quarter outages ran more than 30% below the long-term baseline.
Data center revenue is now expected to reach nearly $450 million this year, with about $250 million of that coming in the back half. Management expects third quarter sales to grow in the high teens and growth to accelerate further in the fourth quarter as new capacity comes online.
The Data Center Backlog
The data center backlog has grown to about $1.6 billion after roughly $1 billion in new orders in just 90 days. About $1.35 billion of that is scheduled for 2027 delivery, including nearly $700 million from the company's first hyperscale customer.
That backlog doesn't include anything from a second hyperscale agreement signed in June. Management said that the deal should be at least as big as the first one and covers both 2027 and 2028. Management also said it expects to "crush" its Investor Day goal of more than doubling C&I revenue within three years, possibly as early as 2027.
The Amazon Deal
Then came the big one.
On September 16, the company disclosed a long-term supply agreement to provide backup generators for Amazon data centers. Initial deliveries are expected to total $2.4 billion across 2027 and 2028.
As part of the deal, Amazon received a warrant for up to 1.69 million shares at $200.93 per share, or about 2.9% of shares outstanding. Just under 308,000 of those shares vested immediately. The rest vest in tranches as Amazon's generator purchases build toward $8 billion, and the warrant runs through September 2033.
This structure ties Amazon's upside directly to how much equipment it buys. The initial $2.4 billion alone is well above the entire current data center backlog. If purchases approach the $8 billion ceiling, If Amazon's purchases approach the $8 billion threshold, the relationship could become a significant part of Generac's revenue base for years.
Estimates Point Higher
The near-term estimate picture is mixed, but the longer-term trend is strong. The Zacks Consensus Estimate for the current quarter has slipped to $2.39 from $2.52 over the last 60 days. The fourth quarter estimate edged down to $2.64 from $2.68.
The modest trims appear consistent with the softer Residential outlook.
The bigger picture is much better.
The full-year 2026 estimate has climbed to $9.74 from $9.01 over the last 60 days, an 8% increase. Two analysts raised their 2027 forecasts in just the last week, pushing the consensus to $11.92 from $11.49. That's up 9% from $10.91 three months ago and points to 22% earnings growth next year.
None of those numbers yet fully reflects the $2.4 billion Amazon agreement, with initial deliveries scheduled for 2027 and 2028.
Generac Holdings Inc. Price and Consensus
Generac Holdings Inc. price-consensus-chart | Generac Holdings Inc. Quote
The Stock Setup
GNRC hit a four-year high near $300 earlier this year before the summer selloff knocked the stock into the low $170s.
But when the Amazon news hit the stock surged after hours, moving about $250. The profit takers showed up quickly and knocked the stock back down near the $200 level.
Let’s take a look at the moving averages:
21-Day MA: $211
50-Day MA: $202
200-Day MA: $190
With the stock back near its 50-day moving average and still above its 200-day, the technical setup gives longer-term investors a potential entry point after the initial Amazon-driven spike.
In Summary
The home standby business still pays the bills, but data centers are rewriting Generac's growth profile. A $1.6 billion backlog, a second hyperscale deal not yet included and a new $2.4 billion Amazon agreement give the company unusually strong visibility into future growth.
Now it comes down to execution. Generac has to ramp production fast enough to meet demand without sacrificing margins or running into supply-chain constraints. But with 2027 estimates rising and a Zacks Rank #1 (Strong Buy), this stock offers a very different way to play the AI infrastructure buildout.