First deliveries of backup-power generators are worth $2.4 billion

The deal with Amazon is a big step for Generac, a $10 billion company whose residential generators are ubiquitous in big-box stores.

Shares of Generac Holdings skyrocketed late Wednesday after the maker of residential and industrial power generators signed a deal of up to $8 billion with Amazon.com for backup-power generators for data centers.

Generac $(GNRC)$ said the deal includes initial deliveries of backup-power generators worth $2.4 billion in 2027 and 2028. The deal also included warrants allowing an Amazon (AMZN) subsidiary to buy Generac shares through 2033, the manufacturer said in a late Wednesday filing.

Generac shares rose more than 34% in the after-hours session Wednesday, after ending the regular trading day up less than 0.1%.

The deal with Amazon is a big step for Generac, a $10 billion company whose residential generators are ubiquitous in big-box stores like Home Depot (HD) and warehouses such as Costco (COST), and which also makes products such as EV chargers and solar-battery storage.

In a July earnings report, it highlighted "continued momentum" for its data-center sales and it pledged to ramp up production for large-megawatt backup generators. The company added that it had a backlog for products serving the data-center market of about $1.6 billion at the time.

In a March presentation to investors, the company forecast sales of $1 billion by 2028, calling it a "generational growth opportunity."

Shares of Generac have gained 28% so far this year, compared with gains of around 10% for S&P 500 index SPX.

Tomi Kilgore in New York contributed.

-Claudia Assis