Generac Powers Data Centers
Generac Secures Key Data Center Power Deal, Boosts 2026 Financial Outlook
Generac Holdings (NYSE: GNRC) has signed a global supply agreement with a leading hyperscale data center operator, cementing the company's rise from home generator maker to critical AI infrastructure supplier. The deal, announced June 2, sent shares up 7.7% in pre-market trading, extending a year-to-date gain of roughly 97% Yahoo Finance.
The contract followed a rigorous qualification process that included factory visits, performance reviews, and vendor audits. CEO Aaron Jagdfeld said the agreement "solidifies our position as a top-tier supplier of large megawatt backup power generators" and called the data center boom a "generational opportunity."
Generac Beat Earnings and Raised Its 2026 Outlook
The deal caps a strong Q1 2026 for Generac. The company reported net sales of $1.06 billion, up 12% year over year. Earnings per share came in at $1.80, beating Wall Street's consensus estimate of $1.33 by 35%, according to Yahoo Finance.
Generac also raised its full-year 2026 guidance. The company now expects net sales to grow in the mid-to-high teens percent range, up from its earlier forecast of mid-teens. Management set an adjusted EBITDA margin target of 18.5% to 19.5%. CFO York Ragen confirmed the upgrade during the Q1 earnings call.
A $700 Million Backlog Fuels the Data Center Push
Generac's data center backlog has grown fast. It stood at $400 million in February 2026. By March, it had jumped to over $700 million. The company also received a $600 million non-binding notice to proceed from a single hyperscale customer for 2027 deliveries, according to Yahoo Finance.
The identity of the hyperscale customer remains undisclosed. Analyst speculation has linked the deal to the "Stargate" AI data center project, a rumored $100 billion venture involving Microsoft and OpenAI. Jefferies analyst Tanner James noted that Generac's use of Baudouin engines gives it a "meaningful competitive moat" in the U.S. market. Jefferies upgraded the stock to "Buy" on May 22, and shares jumped 9.2% that day.
Manufacturing Expansion Backs Up the Big Contract
Generac has been building capacity to meet demand. In January 2026, the company announced a new manufacturing facility in Sussex, Wisconsin, dedicated to large megawatt Commercial and Industrial generators. The plant is expected to create over 100 new jobs and push domestic large-megawatt capacity past $1 billion.
In April, Generac closed its acquisition of Enercon Engineering, a specialist in generator enclosures and switchgear. The move was designed to cut packaging bottlenecks for large data center projects. EVP Erik Wilde said the deal reflects Generac's "engineering-first organization" and its ability to support "critical infrastructure at scale."
Wall Street Is Bullish, But Some Warn of Overvaluation
Analysts have responded with higher price targets. Needham's Sean Milligan maintained a $282 target, saying the global agreement "de-risks" Generac's growth story. UBS analyst Jon Windham raised his target to $305, arguing the data center backlog provides more predictable revenue than Generac's old residential business, according to Yahoo Finance.
Not everyone is convinced. Some investors warn that Generac trades at a price-to-earnings ratio above 70x, which assumes perfect execution. The company still faces stiff competition from Caterpillar and Cummins. Environmental groups have also raised concerns about the AI boom's reliance on diesel generators, pushing for stricter emissions standards and battery alternatives.
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