Generac Shares Surge 17% as Data Center Demand Drives Earnings Beat

Generac (NYSE: GNRC) saw its shares climb 17% on Wednesday following a first-quarter earnings report that exceeded analyst expectations across key metrics. The company reported a 13% increase in sales and a 43% jump in adjusted earnings per share. The rally was primarily driven by a surge in the company's backlog, which grew from $400 million to $700 million sequentially. This growth underscores Generac's successful pivot toward the data center industry, where reliable standby power is critical for AI and machine learning infrastructure. Beyond the reported backlog, the company disclosed a $600 million nonbinding notice to proceed from a hyperscale customer. Consequently, management raised its 2026 sales guidance from mid-teens growth to a mid-to-high-teens range. The Commercial and Industrial (C&I) segment is now expected to grow by 25% to 30%, an increase from the previous forecast of 20% to 25%. The demand is further supported by broader trends, including an 80% increase in U.S. power outage hours since 2015 and rising retail electricity prices. CEO Aaron Jagdfeld noted that falling storage and electronics costs, combined with rising energy prices, create a long-term tailwind for the company's product suite. Despite the stock more than doubling over the past year, it currently trades at a forward price-to-earnings ratio of 30, reflecting investor confidence in its ability to capitalize on the AI-driven infrastructure boom.