Amazon.com Inc. (NASDAQ:AMZN) shares are rising Thursday. The company struck a multibillion-dollar generator supply deal with Generac, while broader markets digest the Federal Reserve’s first rate hike since 2023.
- Amazon.com stock is trading in a tight range. Where is AMZN stock headed?
Amazon Secures Right to Buy Generac Stock in Data Center Power Deal
Generac Holdings Inc (NYSE:GNRC) stock spiked about 33% before Thursday’s opening bell once word got out about its new arrangement to supply Amazon’s data centers with backup power equipment. As part of the deal, Amazon’s investment vehicle, Amazon.com NV Investment Holdings LLC, picked up a warrant letting it buy close to 1.7 million Generac shares at just over $200 apiece, an arrangement that could ultimately be worth roughly $8 billion if fully exercised.
A little more than 300,000 of those shares became available to Amazon right away, and the remainder will unlock gradually depending on how much money flows from Amazon and its various affiliates to Generac in exchange for the generators actually delivered to its facilities.
Beyond the equity piece, the two companies also locked in a separate multiyear supply contract, projecting roughly $2.4 billion worth of generator shipments across 2027 and 2028 alone.
Fed Delivers Expected Hike, But Signals More Could Follow
On the macro side, the central bank moved its benchmark rate up by a quarter percentage point Wednesday, landing in a new 3.75% to 4% range, marking its first increase in roughly three years and matching what most on Wall Street had already priced in.
What caught people off guard wasn’t the hike itself but the forward guidance behind it. Nearly all committee members, 16 out of 18, now anticipate at least one additional rate bump before the year wraps up, a dramatic jump from June, when only six officials expected that outcome. Policymakers’ median outlook now points toward a 4% to 4.25% range by December.
Alongside that shift, the Fed nudged its inflation outlook higher to 3.7% and bumped its growth projection up to 2.3%, while trimming its jobless rate estimate down to 4.1%.
Higher interest rates can affect Amazon given the scale of the company’s ongoing spending on data centers, warehouses and other infrastructure, since borrowing to fund that expansion becomes more expensive as rates climb. Rate increases can also weigh on how investors value growth-oriented stocks like Amazon more broadly, since future profits get discounted more heavily when rates are higher.
AMZN Shares Are Rising
AMZN Price Action: Amazon.com shares were up 1.62% at $249.95 at the time of publication on Thursday, according to Benzinga Pro.
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