Generac Holdings (NYSE:GNRC) has surged 56.65% year-to-date, with shares climbing 36.35% over the past month and 20.51% in the last week. Incredibly, that means Generac is now outperforming 99% of all stocks in the S&P 500 year-to-date.
The reason for the rally is simple: Generac pivoted toward data centers and that bet is beginning to pay off big time.
The Earnings Miss That Didn’t Matter
Generac reported fourth-quarter results on February 11, 2026, missing consensus with revenue of $1.09 billion versus $1.18 billion expected. Adjusted earnings came in at $1.61 per share, below the $1.80 estimate. The company posted a GAAP net loss of $24 million, driven by a $104.5 million legal settlement related to portable generator product liability.
Residential sales declined 23% year-over-year to $572 million as weak power outage activity suppressed demand. But investors focused on what CEO Aaron Jagdfeld said next.
The Data Center Inflection Point
Jagdfeld revealed the company’s position in the data center market has fundamentally shifted: “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.”
The commercial and industrial segment, which includes data center power solutions, grew 10% in Q4 to $400 million. Generac is aggressively expanding capacity to capture a multi-year growth wave. The company purchased an additional manufacturing facility in Wisconsin during Q4 and is investing heavily in existing plants worldwide to produce large megawatt generators for hyperscale customers.
Jagdfeld laid out the ambition: “These opportunities and investments put us well on our way to doubling our C&I product sales in the years ahead.” That’s a business model transformation.
2026 Guidance Drives the Rally
Management’s 2026 outlook explains the stock movement. Generac expects mid-teens revenue growth for the full year, with commercial and industrial sales jumping approximately 30% driven by data center demand and the recently completed Allmand acquisition. Even residential sales are projected to grow around 10%, assuming normalized outage activity returns.
The company announced a new $500 million share repurchase program on February 9, 2026, signaling management’s confidence in the valuation and cash generation capability. With $189 million in operating cash flow and $130 million in free cash flow generated in Q4, Generac has the financial flexibility to fund both capacity expansion and shareholder returns.
Analysts have responded accordingly. The consensus target price sits at $202.94, with 15 of 21 analysts rating the stock Buy or Strong Buy. The market is betting that Generac’s pivot from a cyclical residential generator company to a critical infrastructure provider for AI data centers justifies a higher multiple. With the stock trading at a forward P/E of 22x, investors are paying for growth that’s finally materializing in backlog and capacity investments.
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