- Generac shares rose over 40% after Amazon received warrants for 1.69 million shares
- Amazon can buy Generac shares at $200.93 each, valuing the full investment near $340 million
- Generac will supply backup power generators for Amazon data centres worth $2.4 billion by 2028
Amazon-Generac Deal: Generac Holdings shares surged more than 40% in extended trading Wednesday after Amazon agreed to receive warrants that could allow it to purchase up to 1.69 million shares of the backup power generator maker, according to CNBC.
The deal comes as Amazon Web Services ramps up data centre capacity to meet soaring demand for artificial intelligence computing.
Amazon Gets Generac Warrants
Under the agreement, Generac issued Amazon warrants to purchase up to 1.69 million shares at $200.93 per share. If fully exercised, the investment would be worth nearly $340 million.
The warrants represent roughly 3% of Generac's outstanding shares. Generac had a market capitalisation of around $10.3 billion at Wednesday's close.
Around 308,000 warrant shares vested immediately, while the remaining warrants will vest in tranches based on Amazon's payments for generators.
Generac To Supply Amazon Data Centres
The agreement includes a supply arrangement under which Generac will provide backup power generators for Amazon's data centres.
Initial deliveries are expected to be worth approximately $2.4 billion in 2027 and 2028, according to a securities filing.
The deal highlights the growing importance of reliable power infrastructure as technology companies accelerate data centre construction to support AI workloads.
Amazon Expands AI Infrastructure Deals
The Generac agreement is the latest in a series of infrastructure-related deals by Amazon.
Last week, Amazon struck an agreement with Qualcomm to use the chipmaker's custom artificial intelligence processors. That deal also included warrants that could allow Amazon to acquire up to $4 billion of Qualcomm stock.
Amazon Web Services has been aggressively expanding its data centre footprint as demand for computing capacity rises with the growth of artificial intelligence.
Amazon signed a $38 billion cloud deal with OpenAI last November. In October, it also opened an $11 billion data centre campus for Anthropic.
Amazon's Supplier Investment Strategy
Amazon has frequently used warrants and equity investments as part of arrangements with key suppliers and infrastructure partners.
The company has previously taken similar positions involving semiconductor maker Astera Labs, air cargo contractor Air Transport Services Group (ATSG), green hydrogen producer Plug Power and grocery distributor SpartanNash.
That said, the Generac agreement therefore adds another supplier relationship to Amazon's broader strategy of securing critical infrastructure and capacity for its expanding cloud and AI operations.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.