Amazon obtains right to buy up to $340M of Generac, boosting stock

Amazon was granted warrants to purchase up to $340 million worth of Generac stock, sending shares of the backup power provider soaring more than 40% in extended trading on Wednesday.

As part of the agreement, Generac said in a securities filing that it issued warrants to Amazon to acquire up to 1.69 million shares in the company at $200.93 a piece for a total investment that could be worth as much as $8 billion.

Generac will supply Amazon with backup power generators for its data centers, with initial deliveries expected to total $2.4 billion in 2027 and 2028, the filing states.

About 308,000 warrant shares vested immediately and the remaining tranches vest contingent upon payments for the generators.

The warrants are equivalent to almost 3% of outstanding shares in Generac, which has a market cap of about $10.3 billion, as of Wednesday’s close.

It marks the latest infrastructure deal for Amazon. Last week, Amazon struck a deal with Qualcomm to use its custom artificial intelligence chips, and got warrants to acquire as much as $4 billion in Qualcomm stock.

Amazon Web Services, the leader in cloud infrastructure, has been rapidly building out data center capacity to meet a surge in compute demand tied to the artificial intelligence boom.

Amazon frequently purchases warrants and takes stakes in its suppliers, including semiconductor firm Astera Labs, air cargo contractor ATSG, green hydrogen supplier Plug Power and grocery distributor Spartan Nash.