Generac stock rallies after buy upgrade tied to hyperscaler momentum
Investing.com -- Generac Holdings shares rallied nearly 7% on Friday after it received a bullish upgrade from Jefferies, as analysts argued the backup power equipment maker is nearing a “moment of truth” in securing major hyperscaler data-center contracts tied to the AI infrastructure boom.
Jefferies raised its rating on Generac to “Buy” from “Hold” and lifted its price target to $302 from $239, implying roughly 22% upside from the stock’s previous close of $247.79. Analysts said the company’s growing role in supplying emergency backup generators for large-scale AI data centers could significantly accelerate earnings growth over the next several years.
The brokerage highlighted ongoing negotiations with multiple hyperscalers and noted that Generac had already disclosed a nonbinding $600 million notice-to-proceed agreement tied to a potential large customer. Analysts described the company as being on the “one-yard line” in securing its first major hyperscaler contract.
A key part of Jefferies’ thesis centers on evidence that Baudouin engines — supplied exclusively in the U.S. through Generac — are appearing in permitting documents connected to the “Stargate” AI infrastructure project in Abilene, Texas. The project is associated with hyperscaler-backed data-center expansion, including facilities linked to Oracle Corporation. Analysts cautioned that the filings do not directly confirm Generac’s involvement, but said they indicate market acceptance of the engine technology among hyperscale operators.
Jefferies now expects Generac to secure two hyperscaler supply agreements over the next three years, helping lift projected 2028 revenue to $6.8 billion, above both company guidance and Wall Street consensus estimates. The firm forecasts adjusted EBITDA could rise to nearly $1.5 billion by 2028, driven by expanding commercial and industrial demand and stronger margins.
The note also downplayed concerns about weakness in consumer spending affecting Generac’s residential backup-generator business. Jefferies argued that home standby generators are increasingly viewed as essential infrastructure by affluent homeowners amid rising grid instability and severe weather risks.