Generac signs $8 billion Amazon data center generator deal

Generac Holdings (GNRC) shares surged by more than 18% on Thursday after the company announced a contract to supply backup generators to Amazon (AMZN). The agreement, valued at up to $8 billion, is designed to secure power for the hyperscaler's expanding network of data centers. Bloomberg reported that initial deliveries under the deal are expected to total $2.4 billion in 2027 and 2028, with volume ramping up from there.

The contract marks a significant shift for Generac, which has historically focused on home generator sales. The deal highlights a growing bottleneck in AI infrastructure, where securing reliable power has become a primary constraint on technological expansion. In April, Oracle (ORCL) signed a similar agreement to purchase up to 2.8 gigawatts of power from fuel cell provider Bloom Energy (BE).

Broader market sentiment improved as investors assessed the Federal Reserve's decision to raise interest rates by 25 basis points on Wednesday, the first hike in three years. The S&P 500 (^GSPC) climbed 1.1% and the Nasdaq Composite (^IXIC) jumped 1.6%, while the Dow Jones Industrial Average (^DJI) rose 0.7%. Federal Reserve Chairman Kevin Warsh's hawkish rhetoric appeared to restore market confidence in the central bank's commitment to containing inflation.

Oil prices eased, with Brent crude (BZ=F) trading near $104 per barrel. US Energy Secretary Chris Wright stated that Saudi Arabia's East-West pipeline, a key alternative route for oil bypassing the Strait of Hormuz, would be restored soon. Bloomberg reported that Saudi Arabia aims to return about half of the damaged pipeline's capacity within days and full operations in approximately six weeks.

In the semiconductor sector, Micron (MU) shares rose more than 5% following comments from Intel CEO Lip-Bu Tan. Tan stated that memory chip demand is not slowing and that prices have increased five to seven times, with capacity remaining very constrained. While these higher costs may pad chipmakers' profits, Barclays strategist Venu Krishna warned that rising memory expenses could pose an earnings risk for chip buyers in 2027.

Crypto-related stocks also advanced as Bitcoin (BTC-USD) rose. Coinbase (COIN) and Strategy (MSTR) shares each gained 4%, while Robinhood (HOOD) increased 3%. Coinbase CEO Brian Armstrong said the company will pursue clearer crypto rules through the SEC and CFTC rather than Congress, following the Senate's failure to pass the Clarity Act.

The Bank of England held its benchmark bank lending rate steady at 3.75% on Thursday. Governor Andrew Bailey warned that inflationary pressures may force the central bank to hike rates in coming months, noting that prolonged global energy cost volatility could impact UK inflation. European equities responded positively, with the STOXX 600 (^STOXX) index gaining roughly 0.4%.