Value Investing with Sven Carlin, Ph.D. on $GNRC (Nov 3, 2026)
GNRC is a less risky AI-infrastructure bet: at $9 EPS this year it trades at a P/E of 20, with a $1.6 billion data-center backlog and Amazon contracts that could reach $8 billion; if residential stabilizes within a year or two, EPS could top the $16 expected for 2028, implying a 50% or more gain at 15-20x, though further residential disruption could change the story.
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Now, this is a very interesting story . Whether or not there is an AI bubble, the investments are there, and trillions of dollars are flowing in. Why not invest in a company that provides the essential tools to support the building and development of the artificial intelligence boom ?
Therefore, you can buy something cheaply and take advantage of the AI madness . The stock is Generac Holdings.
The stock has already risen significantly, but if we look at what is happening, what they are producing, the demand coming in, the growth there, and the industrial demand for this company producing what data centers need , which is backup power solutions, along with the residential sector, which depends on the quality of the power.
Power outages have been minimal in the past few years, so demand from the company's residential side has been lower, but this has been offset by higher demand from data centers as they are now investing in producing all of these backup power solutions for data centers, and their backlog of orders has already reached $1.6 billion .
This led to expectations of 30 % growth for their industrial sector, and you can see here that this product will not suit your home, but it is perfectly suited for a data center.
Earnings per share are expected to reach nine dollars this year , giving it a price-to-earnings ratio (P/E) of 20, as data center construction is expected to continue growing in the next few years, and we already have contracts with Amazon and another giant company that could reach $8 billion for Amazon alone over the years, leading to high growth rates for the company.
If the residential sector experiences further disruptions, it could completely change the course of the story. Therefore, profit margins may improve. They are investing heavily now in production capacity and everything else.
So, when things stabilize in a year or two with some buybacks and improved margins, earnings per share could rise to more than the $16 analysts predict by 2028, which is 16 multiplied by a price-to-earnings ratio of between 15 and 20.
That's a 50% or more increase from current levels.
Therefore, Generac appears to be a less risky bet in the field of artificial intelligence. The contracts are already in place, and regardless of whether Amazon makes money or not, this is the idea behind investing in basic tools and equipment .
From a personal point of view, I find it extremely interesting. I would like to find these opportunities before they become obvious to everyone, but this may also be a good time.
Yes, Peter Lynch always said: You should buy now based on the profits two years from now. This is the place where no one is looking. We have Amazon contracts, and we have this.
The market usually doesn't see these opportunities until they actually happen, at which point it gets very excited. Therefore , this could be a very interesting bet in the field of artificial intelligence infrastructure.