Power Shortage: Amazon Locks In $8 Billion for Backup Generators

2026-09-21

On September 16, Generac Holdings signed a seven-year long-term supply agreement with Amazon. Under the deal, Amazon will purchase backup generators for its data centers from Generac, with total purchases of up to $8 billion. The initial order is worth about $2.4 billion, scheduled for delivery in 2027 and 2028, averaging about $1.2 billion per year.

Power Shortage: Amazon Locks In $8 Billion for Backup Generators

Generac issued warrants to Amazon.com NV Investment Holdings, an Amazon subsidiary, allowing it to purchase up to approximately 1.69 million Generac shares. About 308,000 shares vested immediately upon signing, accounting for about 18%; the remainder is tied to Amazon's cumulative purchase amount. The more generators Amazon buys, the more shares it can subscribe to, until all are unlocked when cumulative purchases reach $8 billion. The warrants are valid until September 16, 2033, and may be exercised in cash or cashlessly before expiration.

The bottleneck in AI compute investment is shifting from chips and servers to power infrastructure. A McKinsey report released in June this year estimates that global data center IT equipment load demand will grow from about 82 GW in 2025 to about 220 GW in 2030, with AI-related demand rising from about 44 GW to 155 GW. The aging U.S. grid infrastructure and grid interconnection approval cycles lasting years in some regions are driving tech companies to increasingly rely on self-built power generation as a supplement, directly pushing up demand for backup power equipment.

Supply and demand are tightening. Production capacity for mainstream high-power data center backup generators worldwide is already booked through 2027–2028, while Siemens Energy's delivery schedule extends further to 2029–2030. The Amazon order will boost Generac's 2028 EBITDA by more than 20%. Generac management plans to expand large generator capacity to about three times the current level by August 2027, and Amazon's long-term purchase commitment provides clear demand support for this expansion plan.

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