Amazon is deepening its push into the infrastructure needed to power artificial intelligence data centers, agreeing to receive warrants worth up to $340 million in backup power provider Generac as part of a multibillion-dollar supply deal.
The agreement sent Generac shares soaring more than 40% in extended trading on Wednesday, underscoring the growing investor focus on companies that supply the electricity, backup generation and other physical infrastructure required to support the rapid expansion of AI computing.
Under the agreement, Generac issued Amazon warrants to purchase up to 1.69 million shares at $200.93 per share, according to a securities filing. If all of the warrants are exercised, Amazon’s investment in Generac shares would be worth about $340 million at the exercise price.
Register for the next Tekedia Mini-MBA.
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
The warrants represent almost 3% of Generac’s outstanding shares, based on the company’s market capitalization of about $10.3 billion at Wednesday’s close.
The broader commercial relationship is substantially larger. Generac will supply Amazon with backup generators for its data centers, with initial deliveries expected to total $2.4 billion in 2027 and 2028, according to the filing.
About 308,000 of the warrant shares vested immediately, while the remaining tranches will vest based on Amazon’s payments for the generators. The arrangement gives Amazon another way to secure critical infrastructure as it expands data-center capacity to meet demand for computing power generated by artificial intelligence.
Amazon Builds An AI Infrastructure Supply Chain
The Generac agreement follows a series of deals in which Amazon has combined large purchases from suppliers with warrants or other equity-linked arrangements.
Last week, Amazon struck an agreement with Qualcomm to use the chipmaker’s custom artificial intelligence processors and received warrants to purchase as much as $4 billion of Qualcomm stock. The deal gives Amazon access to additional chip capacity as it develops its own computing infrastructure and looks to diversify the technology supporting its cloud operations.
Amazon Web Services, the company’s cloud computing division, is the largest cloud infrastructure provider and has been rapidly expanding data-center capacity as companies increase spending on AI applications and computing.
The scale of that expansion has made power availability a growing constraint for data-center operators. AI workloads require large amounts of electricity, while operators also need backup systems to keep facilities running during disruptions to the grid. That puts companies such as Generac in an increasingly important position in the AI infrastructure buildout. Backup generators do not replace the electricity supplied by the grid, but they provide an additional layer of power resilience for facilities where interruptions can be costly.
Amazon’s recent infrastructure commitments show the company is increasingly securing several parts of the supply chain rather than relying exclusively on conventional procurement. The company signed a $38 billion cloud deal with OpenAI last November. It also opened an $11 billion data-center campus for Anthropic last October.
The Generac transaction adds power equipment to that expanding infrastructure network.
Amazon has previously used similar arrangements with suppliers, purchasing warrants or taking stakes in companies that provide products and services it considers important to its operations. Its investments have included semiconductor company Astera Labs, air-cargo contractor ATSG, green-hydrogen supplier Plug Power and grocery distributor SpartanNash.
The approach can give Amazon a financial interest in suppliers while helping secure access to capacity as demand increases. For Generac, the Amazon agreement provides visibility into future demand at a time when data centers are becoming an increasingly important source of growth for power infrastructure companies.
The immediate market reaction showed how closely investors are watching that trend. Generac’s shares jumped more than 40% after the announcement, although the warrants themselves represent only a fraction of the value of the broader generator supply agreement.
The structure also ties part of Amazon’s potential ownership in Generac directly to its purchases. While a portion of the warrants vested immediately, the remaining shares are linked to payments for the generators, creating a connection between Amazon’s procurement commitments and its potential equity stake.
The deal is seen as an indication of a broader shift in the economics of the AI boom. The competition to build powerful models and cloud services is now extending beyond chips and software into electricity generation, data-center construction, and equipment capable of keeping those facilities operating around the clock.
Amazon’s growing involvement with suppliers such as Generac and Qualcomm has added to the belief that securing the physical infrastructure behind AI has become an important part of the industry’s expansion.