Generac just gave Amazon the right to buy 1.69M shares at $200.93 as part of a potentially massive data center deal

Generac just gave Amazon the right to buy 1.69M shares at $200.93 as part of a potentially massive data center deal I was digging through Generac’s latest 8-K and this deal with Amazon is a lot more interesting than the headline makes it sound. On September 16, Generac signed a long-term supply agreement with Amazon to provide backup generators for Amazon data centers. Generac expects the initial deliveries alone to total $2.4 billion across 2027 and 2028. For context, Generac did $1.17 billion in sales last quarter, so this is not a small contract relative to the existing business. But the part I found more interesting is what Amazon got alongside the supply agreement. Generac issued Amazon a warrant to buy up to 1,693,745 GNRC shares at a fixed exercise price of $200.9266 per share. Amazon does not get all of those shares immediately. 307,954 shares vested at signing. The rest vest in multiple tranches as Amazon makes payments to Generac for backup power equipment. If cumulative payments eventually reach $8 billion, the full 1.69 million shares vest. The warrant runs until September 16, 2033, and Amazon can exercise it either for cash or through a cashless exercise. So the structure is basically this: Amazon buys a lot of backup power equipment from Generac, Generac gets potentially billions in data center revenue, and Amazon gets increasing equity participation in GNRC as its purchases grow. The bigger the relationship becomes, the more GNRC shares Amazon earns the right to buy at $200.93. There are some important unknowns. Generac redacted portions of the agreement, so we don’t know the exact intermediate spending thresholds that unlock additional shares. We also don’t know the exact length of the supply agreement beyond Generac calling it “long-term.” And the $8 billion is not guaranteed. Generac itself warned in its August 10-Q that large data center customers can have cancellation rights and that there is uncertainty around continued data center market growth. Still, $2.4 billion of expected deliveries in 2027 and 2028 is significant against Generac’s current revenue base. The thing I’ll be watching is whether Amazon starts vesting additional warrant shares during 2027. That would tell us the purchasing relationship is actually progressing beyond the initial award rather than just looking impressive on paper. Curious what everyone thinks. Is the Amazon equity piece meaningful to the GNRC thesis, or is the real story simply the size of the potential data center revenue?