Amazon has crowned the latest winner of the AI infrastructure boom.
Known more for its home backup generators than as a player in the data center buildout, Generac has entered into an agreement with the Big Tech titan that’s sent the stock soaring as much as 32% on Thursday.
Amazon inked a deal with Generac that awards it warrants to buy 1.69 million shares of the generator company according to a regulatory filing. In turn, the Wisconsin-based company will supply $2.4 billion worth of generator equipment for Amazon’s data centers.
“Generac is up 35% on an Amazon deal to supply generators, not chips, for data centers,” stated Matthew Tuttle, CEO of Tuttle Capital Management. “That’s this week’s AI trade in a nutshell.”
Tuttle told Business Insider recently that he considers power delivery as the biggest problem facing the AI trade, highlighting it as a key bottleneck investors shouldn’t ignore.
Investors were snapping up shares of other power companies with links to AI on Thursday as Generac stock soared. Here are some of the biggest moves during the session:
“In our view this is a significant positive for GNRC, a company that only announced the intent to enter the large data center market in 2025,” wrote UBS analyst Jon Windham in a note to investors.
Part of the momentum boosting Generac stock is tied to the issuance of warrants that could allow Amazon to purchase billions of dollars worth of shares.
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But the deal may also mark a new avenue of investment in the AI trade. The question of whether the chip makers are still the best AI play has been hotly debated this year as Wall Street considered surging costs and questioned the sustainability of the demand for high-end GPUs.
Concerns about bottlenecks have compelled some investors to seek out other ways to gain exposure, often focusing on pick and shovel plays like power and construction.
Now that Amazon has inked a deal with a power equipment maker like Generac, it will likely be harder to ignore the fact that under-the-radar utilities stocks may be among the winners of the AI boom’s next phase of growth.