GNRC: Solidifying Its Position As An AI Play After Amazon Deal

The market is currently pricing in what would be the shallowest interest rate hike cycle in modern history. Meanwhile, shares of Generac Holdings Inc. (GNRC) soared after the maker of generators signed a long-term contract with Amazon.com Inc. (AMZN) to supply $8 billion worth of generators for its data centers

The Federal Reserve rate hike is being billed as an effort to see inflation have a “timelier return” to 2% while financial conditions remain accommodative. For its part, the Bank of England kept rates unchanged despite both the European Central Bank and the Fed increasing recently.

As for Generac, the deal also gave Amazon a warrant for a stake in the company. For context, Generac's revenue this year is projected to be $5 billion. The deal cements Generac as an AI stock now - instead of just a provider of generators to the likes of Costco Wholesale Corp. (COST) and Home Depot Inc. (HD).

Shares have actually been under pressure over the past few months on concerns that a crucial part for its generators is made in China. Recently, President Trump signed an executive order banning foreign-sourced grid equipment. While this might not directly impact Generac because it is a back-up power source and not plugged into the grid, it has weighed on sentiment.