Bull of the Day: Generac Holdings Inc. (GNRC)

Generac Holdings Inc. GNRC is a leading maker of backup power generators riding multiple long-term growth cycles across power-hungry AI data centers, electrification, energy storage, and energy independence.

Generac posted a blowout beat-and-raise first quarter report at the end of April, driven by surging demand for its larger Commercial & Industrial generators, especially from data centers and AI infrastructure projects that need reliable backup power.

Its Commercial & Industrial unit revenue jumped 28% in Q1, with GNRC calling for a compound annual growth rate in the low to mid 20% over the next three years. The critical backup power generator giant has surged 95% YTD, including a 25% climb after its April 29 earnings release.

Despite the rally, the Zacks Rank #1 (Strong Buy) stock still trades 45% below its 2021 highs. This means that GNRC would have to climb almost 90% to return to its all-time highs. And the AI energy and electrification stock is on the cusp of breaking above of a key technical range.

The "Strong Buy" Stock's AI Energy and Long-Term Bull Case 

Generac is the leading manufacturer of backup power generators. The Wisconsin-based company makes products that automatically supply electricity when the main power grid fails, serving customers across residential, portable, commercial, industrial, and more.

GNRC also offers solar power and battery storage solutions, as well as smart home energy monitors and more. These are part of a broader home energy solutions push. The company has EV charging offerings as well. Meanwhile, its portable generators are smaller, movable units used for camping, job sites, and short-term power needs.

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Its residential generators are large, permanent home standby generators installed outside houses, which turn on automatically during power outages. This segment is growing as the U.S. suffers from more frequent outages, as the grid ages rapidly while demand soars.

Generac’s home standby segment is also benefiting from a society that is becoming more sensitive to outages because people are increasingly connected and working from home. On top of that, the population is aging, with 65% of HSB generator customers 60+, with a large portion of homeowners preparing to “age in place.” 

Generac’s Commercial & Industrial (C&I) segment makes large-scale backup generators and power systems for businesses, hospitals, AI data centers, factories, apartment buildings, and beyond that need reliable power 24/7.

The Commercial & Industrial unit is its biggest growth driver, benefiting from surging AI data center demand, more frequent grid outages, and increasing need for backup power in commercial buildings.

Large AI data centers consume as much electricity as a mid-sized city. AI growth, alongside reshoring and the energy transition, are expected to drive a 25% increase in U.S. electricity demand by 2030 and a 75% to 100% increase by 2050. This is straining the grid after decades of underinvestment, with GNRC pointing to upside because “dispatchable power supply is expected to lag accelerating demand through 2030.”

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Generac highlighted in its Q1 earnings presentation that the total addressable market for data center emergency backup power is $14 billion to $17 billion. The AI hyperscalers are projected to spend $600 billion to $700 billion in capex in 2026 alone, up from roughly $400 billion in 2025.

The company’s large-scale emergency backup power “ensures redundancy meets strict data center end-user uptime requirements while also preventing systemic hardware damage." 

AI Infrastructure-Boosted Growth

Generac’s Commercial & Industrial unit revenue jumped 28% in Q1. On that front, it closed two acquisitions in the first four months of 2026 as part of its strategy to expand its increasingly important Commercial & Industrial segment.

This unit is set to expand at a compound annual growth rate in the low to mid 20% over the next three years. Generac’s commercial growth is set to help C&I and Residential each generate 50% of the business by 2028, vs. 2025’s 41% from the C&I unit.

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The company said it is riding “generational growth” opportunities that will help it post mid-teens CAGR over the next 3 years vs 2025. GNRC said that secular mega-trends across AI and beyond will help it nearly double its C&I Segment sales by 2028.

On the earnings front, Generac expects to grow its adjusted EBITDA to between $1.25 to $1.45 billion in 2028, implying a low 20% CAGR, with its EBITDA margins set to jump from 17% in 2025 to the lows 20s% by 2028.

Generac crushed our Q1 earnings by 35% and raised its guidance. Its consensus 2026 earnings estimate has jumped 6% since its release, with its 2027 outlook 9% higher. GNRC’s upward EPS revisions land it a Zacks Rank #1 (Strong Buy).

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The company is projected to grow its adjusted earnings by 41% in 2026 and 19% next year to reach $10.60 a share, which would see it overtake its previous 2021 records. Meanwhile, it’s expected to grow its revenue by 17% this year and over 13% next year to hit $5.58 billion, blowing away 2022’s $4.57 billion in the process.

Buy Soaring Top-Ranked GNRC Stock for 90% Upside?

Generac shares have soared 1,350% in the past 15 years, outperforming its industry’s 233% and the S&P 500’s 500%. This impressive stretch includes its 45% decline from its late 2021 peaks. 

GNRC stock offers roughly 90% upside if it were to ever return to its all-time highs of around $505 a share vs. Wednesday’s ~$267 a share.

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GNRC stock has already skyrocketed 95% in 2026 and 110% over the past year. The run has it on the verge of overtaking some critical ranges from before its 2022 selloff.

Plus, it experienced a long-term golden cross earlier this year, with its 50-week moving average crossing above its 200-week trendline.

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This article originally published on Zacks Investment Research (zacks.com).

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