For Immediate Release

Chicago, IL – September 24, 2026 – Zacks Equity Research shares Generac Holdings (GNRC Quick QuoteGNRC - Free Report) as the Bull of the Day and Build-A-Bear Workshop (BBW Quick QuoteBBW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA Quick QuoteNVDA - Free Report) and Sandisk Corp. (SNDK Quick QuoteSNDK - Free Report) .

Here is a synopsis of all four stocks:

Bull of the Day:

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.

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.

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.

Bear of the Day:

Build-A-Bear Workshop, a Zacks Rank #5 (Strong Sell), is a specialty retailer where customers stuff, dress and name their own plush animals.

The company just gave investors a reason to worry. A weak summer product lineup and soft store traffic led to a second quarter sales miss. Management then cut its full-year revenue and profit outlook as the wholesale business stalled out.

With estimates falling across the board and the stock near 52-week lows, the company is heading into its most important selling season with little momentum.

About the Company

Build-A-Bear is based in St. Louis and has been letting customers stuff, dress and name their own plush animals since 1997. It ended its latest quarter with 674 locations worldwide, which include 379 corporately managed stores, 177 partner-operated locations and 118 franchises.

The company also sells online and has been pushing into wholesale and licensing through its Commercial segment.

BBW is valued at $325 million and has a forward PE of 7. The stock has Zacks Style Scores of "A" in Value, "B" in Growth, but "F" in Momentum.

A Disappointing Quarter

Second quarter earnings of 70 cents per share matched estimates, but fell from 94 cents a year ago. Revenue dropped 7.2% to $115.3 million, missing expectations of $122 million.

Traffic stayed weak throughout the quarter, and domestic store traffic lagged broader U.S. trends. E-commerce demand fell 15.6%.

Management also admitted that summer concepts like Slushy Plushies and Berry Goods "pushed innovation too far." Those products lacked the dressing and customization that drive the core experience. That forced heavier promotions, and retail gross margin fell to 54.0% from 57.6%.

Guidance Cut

The bigger problem was the outlook.

BBW cut its fiscal 2026 revenue forecast to $500 million to $525 million, down from $530 million to $550 million. The new range is well below the $539 million analysts were expecting.

Pre-tax income guidance fell to $60 million to $68 million from $72 million to $78 million. Excluding a roughly $7 million tariff refund tied to last year, the adjusted range is just $53 million to $61 million. The outlook also includes $10 million to $11 million in tariff costs.

Wholesale was another letdown as the company slashed its Commercial segment outlook to roughly flat from growth of at least 20%. Last year's multimillion-dollar Walmart program won't repeat, and other wholesale deals are moving slower than hoped. Commercial revenue is now expected to decline in the fourth quarter.

Estimates Are Falling

Analysts wasted no time adjusting their numbers. There hasn't been a single upward revision in the last 60 days across any time period.

The biggest cuts hit the near term.

The Zacks Consensus Estimate for the current quarter has fallen to 53 cents from 84 cents over the last 30 days, a drop of 37%. The fourth quarter estimate is down 20%, to $1.22 from $1.52.

For the full fiscal year, the consensus has dropped to $3.57 from $4.02. Next year's estimate has been cut to $3.76 from $4.30.

The Technical Breakdown

The stock is what some would call a bleeder. After hitting a high of $73.46 to start the year, shares have been in a slow and steady decline.

Shares closed above $39 the day before earnings, down about 42% over the prior 12 months. The guidance cut then sent the stock down roughly 15% at the open, with shares falling to $24.15.

A stock that was making higher highs a year ago has now turned into a textbook downtrend of lower highs and lower lows.

In Summary

With traffic soft, digital sales shrinking, wholesale stalled and estimates falling sharply, the growth story is coming apart at the seams. Until those trends reverse, the Zacks Rank #5 (Strong Sell) reflects a stock facing significant fundamental and technical headwinds.

Additional content:

Sandisk vs. NVIDIA: Which AI Stock Is the Better Buy Now?

Lately, surging artificial intelligence (AI) and data center demand has benefited both NVIDIA Corp. and the much smaller Sandisk Corp.. While the two companies offer different ways to capitalize on the AI boom, which one stands out to be the better buy now? Let's explore –  

Sandisk's AI-Driven Growth Boosts Revenues and Profitability

Total revenues for Sandisk reached $8.97 billion in the fiscal fourth quarter of 2026, up a whopping 372% year over year and 51% sequentially, according to the company's Aug. 5 press release.

For fiscal year 2026, revenues reached $20.25 billion, representing 175% year-over-year growth. The Data Center segment has been the major growth driver, with revenues jumping 437% as AI and data center demand increased the need for high-value storage. 

In the fourth fiscal quarter, revenue growth came more from higher pricing than higher volumes. As a result, gross margins rose to 84.6% compared to 26.2% a year ago.  

For fiscal year 2026, gross margin was 71.5% compared to 30.1% a year earlier. Profitability also improved dramatically, with GAAP net income coming in at $11.43 billion versus a loss of $1.64 billion in the previous year. 

The growth doesn't seem to be temporary, as management remains bullish on their near-term outlook. They expect revenues to be between $10.3 billion and $10.8 billion in the fiscal first quarter of 2027, which would mean another strong quarterly growth following a huge fiscal fourth quarter. Now that the company has signed five more New Business Model agreements, revenue growth and profitability will surely improve. 

NVIDIA's AI Demand Drives Strong Growth and Margin Expansion

The Data Center segment remains NVIDIA's primary growth engine, with revenues jumping 117% year over year and 18% sequentially to $89 billion in the fiscal second quarter of 2027, according to the Aug. 26 press release. Consolidated revenues soared to $96.2 billion, up 106% year over year and 18% sequentially. 

NVIDIA's non-GAAP gross margin increased to 75% in the fiscal second quarter compared with 72.5% a year ago. Strong operating performance helped NVIDIA convert robust revenue growth into solid earnings growth.

NVIDIA further expects profitability to remain strong and projects revenues of $108 billion, plus or minus 2%, in the fiscal third quarter of 2027. At the midpoint, this would represent a 12% sequential rise. Additionally, the next-generation Vera Rubin platform has entered the full production stage, positioning NVIDIA to benefit from the next phase of AI infrastructure investment. 

Sandisk or NVIDIA: Only One AI Stock to Buy Now

Both Sandisk and NVIDIA have delivered exceptional earnings growth, fueled by an increase in AI and data center demand, resulting in sharp revenue gains and substantial margin expansion. Both companies also look quite confident about their near-term outlooks. 

However, Sandisk is in a highly cyclical memory business. If supply catches up with demand, memory prices may come under pressure and weigh on margins. Moreover, the company's fast-paced growth has raised expectations, which has made its growth trajectory susceptible if pricing momentum weakens. 

Since Sandisk's business is dependent on storage demand, it has created greater concentration risk. In contrast, NVIDIA is capitalizing on the broader AI ecosystem, has dominant data center exposure, and continues to deliver exceptional AI-driven growth. To top it off, NVIDIA's 63.7% net profit margin compared with Sandisk's 56.5%, indicates its greater efficiency in converting revenues into bottom-line profits.

Taken together, these factors make NVIDIA a better buy than Sandisk at the moment. NVIDIA currently has a Zacks Rank #1 (Strong Buy), while Sandisk has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 stocks here.?????????

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