Bank of America has identified new under-the-radar AI data center play

Backup generator manufacturer Generac has a huge opportunity with data centers, according to Bank of America. “Generac’s entry into the data center market marks a multi-year growth inflection, with management calling it the most needle-moving opportunity in decades,” analyst Dimple Gosai told clients in a note Wednesday. Bank of America raised its stock price target for Generac to $221, indicating 21% upside from Wednesday’s close of $181. Generac shares were about 6% higher after the call, putting the stock on pace for a 24% year-to-date gain. The tech sector faces a backup generator deficit in 2026 totaling 5,000 units as they build out data centers, Gosai wrote. This is one of the top two bottlenecks for the industry after transformers, she said. Tech companies are urgently working to fill the gap, which is benefiting Generac, according to the analyst. The company has booked a backlog of $150 million so far with shipments to ramp up in the second half of 2025, the analyst told clients. It is talking to customers who are planning out to 2029. Bank of America forecasts $350 million of data center revenue for Generac in 2026 with sales ramping up to $500 million in 2027 before hitting capacity. Investors should keep an eye on Generac’s bookings cadence, how many hyperscalers it wins and how aggressively the company invests in capacity that may be needed after 2027, Gosai said.