Generac and Amazon Strike $2.4 Billion Generator Supply Deal
Generac, a US power equipment manufacturer, has entered a long-term contract to provide backup generators for Amazon data centers, with initial shipments projected to amount to around $2.4 billion in 2027 and 2028.
Generac's stock jumped over 40 percent during after-hours trading.
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In the agreement, Generac granted a warrant to Amazon.com NV Investment Holdings for the purchase of up to 1.69 million shares of the generator manufacturer’s stock at a price of $200.93 per share.
Approximately 307,954 shares vest right away, while the rest will vest in increments linked to Amazon's acquisitions of backup generators, totaling up to $8 billion in combined payments.
The warrant can be exercised until September 2033 and accounts for almost three percent of Generac's total shares.
Amazon has previously received warrants from suppliers related to its AI and cloud infrastructure expansion, including hydrogen producer Plug Power and air cargo contractor ATSG.
Under the terms of the agreement, Generac stated in a securities report that it granted Amazon warrants to purchase up to 1.69 million shares of the company at $200.93 each, amounting to a total investment potentially reaching $8 billion. Generac is set to provide Amazon with backup power generators for its data centers, with initial shipments anticipated to reach $2.4 billion in 2027 and 2028, according to the filing.
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The warrants represent nearly three percent of the outstanding shares in Generac, which, as of Wednesday's closing, has a market capitalization of around $10.3 billion. It signifies the newest infrastructure agreement for Amazon.
Last week, Amazon reached an agreement with Qualcomm to utilize its proprietary artificial intelligence chips and obtained warrants to purchase up to $4 billion in Qualcomm shares.
Amazon Web Services, the front-runner in cloud infrastructure, has quickly expanded its data center capacity to address the increased compute demand associated with the artificial intelligence surge. It finalized a $38 billion cloud agreement with OpenAI.
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Last October and last November, it inaugurated a vast $11 billion facility for Anthropic
Amazon often acquires warrants and invests in its suppliers, such as semiconductor company Astera Labs., air freight contractor ATSG, green hydrogen provider Plug Power and grocery supplier Spartan Nash.