Why Generac Stock Surged Today
Key Points
Generac's data center business is booming.
Management expects the company's commercial and industrial sales to double in the coming years.
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Shares of Generac (NYSE: GNRC) popped on Wednesday after the energy solutions provider issued an encouraging, artificial intelligence (AI)-powered growth forecast.
By the close of trading, Generac's stock price was up more than 17%.
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A booming new market
Generac's fourth-quarter net sales fell 12% year over year to $1.1 billion.
Fewer power outages led to lower shipments of portable generators. The energy technology specialist's residential product sales, in turn, declined by 23% to $572 million.
However, Generac's commercial and industrial product revenue jumped 10% to $400 million, driven by higher sales to data center customers.
"Our momentum in the data center end market has further accelerated as we continue to develop our position as a key supplier to multiple hyperscale customers, which are expected to add significant volumes to our backlog over the next several quarters," CEO Aaron Jagdfeld said in a press release.
All told, Generac generated adjusted net income of $95 million, or $1.61 per share. That's down from $168 million, or $2.80 per share, in the prior-year quarter.
Profits are set to rebound
Generac sees full-year sales growth in the mid-teens percent range in 2026. Normalized power outage activity is projected to drive a 10% increase in residential product sales. Management also expects commercial and industrial sales to grow by a solid 30%, as Generac ramps up its data center business.
"We are focused on dramatically increasing our capacity and capabilities for large megawatt generators, including the purchase of an additional manufacturing facility in Wisconsin in the fourth quarter and ongoing investments in our existing facilities around the world," Jagdfeld said. "These opportunities and investments put us well on our way to doubling our C&I product sales in the years ahead."
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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