The artificial intelligence boom is fueling one of the biggest infrastructure booms in modern history, with data center growth at the heart of the story.
As cloud computing, AI training models, and high-performance computing demand more power and storage capacity, thousands of new data centers are being planned and constructed across the United States and around the world.
In fact, thanks to the unstoppable AI boom, there are about 4,000 operational data centers in the U.S. right now. An additional 1,500 to 3,000 are being planned or under construction. According to Pew Research, the South has 754 planned data centers. The Midwest has 419 planned. The West has 277 planned, and the Northeast has about 106 planned. Globally, there are about 10,807.
The AI Data Center Boom Is Just Getting Started
While investors have largely focused on AI leaders such as Nvidia, AMD, Micron, and Sandisk, another company is emerging as another way to profit from the trend. Generac Holdings (NYSE: GNRC), best known for its backup power solutions, is rapidly expanding its presence in the fast-growing data center market, positioning itself to benefit from the massive surge in AI-driven infrastructure spending.
Generac Holdings Could Race to Higher Highs
The company raise sales growth, EBITDA, and its margin outlook for the year thanks to data centers, with President and CEO, Aaron Jagdfeld noting, “We are continuing to build momentum in the large and rapidly growing data center end market as we are in the final stages of vendor approval with multiple hyperscale customers and have expanded our backlog for these products with both new and existing customers.
Better, GNRC just signed a global supply agreement with a hyperscale data center operator to supply backup power generators for its data center infrastructure. Plus, analysts at Jefferies just upgraded the GNRC stock to a buy rating, with a price target of $329, noting that GNRC is nearing a “moment of truth” in securing major hyperscaler data center contracts tied to the AI infrastructure boom, as quoted by Seeking Alpha.
Analysts at JPMorgan also have an overweight rating on the stock, noting that, “Gross margin was particularly strong, driven by price-cost realization, and resulting in a solid EPS beat.”
Strong Earnings Support the Bull Case
In its most recent quarter, the company’s EPS of $1.80 beat by 47 cents. Revenue of $1.06 billion, up 12.5% year over year, beat by $10 million. Free cash flow was $90 million, as compared to the $27 million posted a year earlier.
Guidance was even more impressive, with the company now calling for revenue of between $4.84 billion and $5 billion, as compared to estimates of $4.85 billion. It also boosted its adjusted EBITDA margin to 18.5% to 19.5% form a prior outlook of 18% to 19%.
The Bottom Line for AI Infrastructure
With AI adoption accelerating and data center construction booming worldwide, Generac appears well-positioned to capture a growing share of one of the market’s most powerful long-term trends. The company is seeing rising demand for its backup power solutions, securing new hyperscale customer relationships, and building a larger backlog tied directly to AI infrastructure investments.
Add in improving earnings, stronger cash flow, raised guidance, and bullish analyst sentiment, and Generac offers investors a differentiated way to gain exposure to the data center expansion story. If the AI boom continues to drive unprecedented infrastructure spending, GNRC could have plenty of room to run.
