Home / Business and Economy / Generac surges on AI data center power demand
Generac surges on AI data center power demand
19 Dec
Summary
- Wells Fargo upgraded Generac to overweight due to AI-driven power demand.
- Generac stock declined recently but presents an attractive entry point.
- The company is in talks with hyperscalers like Amazon for major orders.
Wells Fargo analyst Praneeth Satish upgraded power generator maker Generac to overweight, signaling a potential 42.3% stock increase. This upgrade is driven by anticipated surges in power demand stemming from the ongoing artificial intelligence buildout. Although Generac experienced a nearly 28% stock decline since late October following weaker-than-expected third-quarter results, Satish views this as an opportune moment for investors.
The current stock price, according to Satish, does not fully reflect the potential upside from diesel generator sales for data center backup power. Generac appears to be on the verge of securing a major hyperscaler client and is doubling its manufacturing capacity to $1 billion annually. Checks suggest the company is currently trialing diesel gensets with Amazon, a partnership that could lead to orders worth hundreds of millions.
Furthermore, Google has released a significant request for proposals that represents a similar multi-hundred-million dollar opportunity across various suppliers. While neither Amazon nor Google has commented on these potential deals, the market is reacting positively, with Generac shares climbing over 3% in premarket trading following the upgrade. Analyst sentiment is mixed, with a majority rating it a buy or strong buy.
