Amazon Pays Its Suppliers, and Collects in Their Shares

Generac had a good Thursday. The stock rose 18.34% to $207.76 after the company signed a long-term deal to supply backup generators for Amazon's data centers, with initial deliveries expected to total $2.4 billion across 2027 and 2028 ¹⁵. But the number that will still matter in 2033 is not the percentage. It is 1,693,745 — the shares Generac granted Amazon's subsidiary a warrant↗ over, at $200.9266 each, exercisable through 16 September 2033 ¹. Only 307,954 vested at signing, about 18.2% of the package ⁶; the rest vests as Amazon's payments for generators reach $8 billion ¹. Fully exercised, that is at least 2.57% of the company on a fully diluted basis, by Generac's own count ³.

Thirteen days earlier, Qualcomm signed the same shape of deal: a warrant on 25 million shares↗ at $161.26, expiring in 2036, 15% vested at issuance and the rest tied to binding orders and actual purchases of its server chips — up to $60 billion of them ⁴. No minimum purchase commitment is disclosed ⁷.

Two in two weeks is a term, not a coincidence. Reporting the Generac deal, CNBC noted that Amazon "frequently purchases warrants and takes stakes in its suppliers," naming Astera Labs, air-cargo contractor ATSG, Plug Power and Spartan Nash ⁹. For companies selling into the AI build-out, the question is no longer only whether you win hyperscaler orders, but what equity you surrender to book them.

What Amazon gets, and what it costs

Amazon pays no premium for this option. The strike was set at signing, and the announcement itself — an 18.4% jump — carried Generac above it within a day ¹⁵. Qualcomm's warrant sits about 17% in the money at $188.64 ⁴⁷. The warrant can be exercised cashless at Amazon's election, so Amazon can take net shares without laying out cash ¹². Generac granted registration rights so those shares can be sold; Qualcomm says it will file a resale prospectus ¹⁴. A 4.999% cap on Amazon's ownership is waivable on 61 days' notice ².

This is a volume rebate paid in the supplier's own paper and funded by its shareholders. If the deal works as both sides hope, Generac's existing owners will own roughly 2.6% less of a larger company ³; CNBC sized the warrant at up to $340 million, almost 3% of the shares ⁹. That can still be a good trade — but it should be priced, not lost in the pop.

One difference between the two deals matters. Generac's transaction agreement↗ recites that Amazon provided purchase orders and commitments for "no less than [***]" — a firm floor exists, and its size is redacted ³. Qualcomm's filing discloses none ⁷. Generac and Amazon also already had a global purchase agreement since 24 June 2026; the warrant arrived as the relationship deepened ³.

What these warrants become

Plug Power took this deal in August 2022: a warrant on 16 million shares↗, 1 million vested immediately, the rest as Amazon's hydrogen payments hit $2.1 billion over seven years, at a strike of $22.9841 on the first 9 million shares, running to 2029 ¹⁰. Plug closed at $2.12 on 17 September 2026 ¹¹. The warrant is deep under water with under three years to expiry, and the supplier that issued it has diluted to some 1.4 billion shares amid persistent cash burn ¹¹. Plug had even given Amazon a warrant once before, in 2017 ¹⁰.

Rivian shows the other half of the pattern, through direct investment rather than a warrant. Amazon's stake reached 22% after the November 2021 IPO, when the stock peaked at $146.07; by May 2026 Amazon held about 12.28%, passed by Volkswagen at 15.9% ¹². Equity did not lock in demand. In early 2023 Amazon told Rivian it wanted roughly 10,000 vans — at the low end of expectations — and Rivian surrendered exclusivity in exchange for freedom to sell to others ¹².

That is the part suppliers should read twice. A warrant that vests on spending pays Amazon only for purchases it would make anyway if the product is competitive. It secures nothing: not volume, not pricing, not loyalty. The product does that work; the warrant just lets Amazon collect a rebate on it.

Who pays, and what to watch

I do not blame either supplier for signing. Generac's home-standby business is sluggish and data centers are its growth lever — a validated AWS supply deal moved Caterpillar, Eaton and Schneider up with it ⁸. Accepting ~2.6% contingent dilution ³ for a customer of Amazon's scale is a defensible price, and Generac at least has a floor, even a redacted one ³.

The asymmetry is still worth naming. The scarce resource in the AI build-out is qualified supply — generators, chips — not Amazon's cash. Amazon is converting purchasing volume into equity claims on its suppliers at zero premium, and every signature teaches the next supplier that the term is askable. Meanwhile the supplier's growth now hangs on one customer whose filings promise, in Qualcomm's case, nothing at all ⁷.

So value the warrant for what it is. It is a rebate, not an endorsement, and a ceiling on how much of your own success you keep. The two numbers worth checking before cheering the next one: the vesting threshold against what the customer was realistically going to spend, and the share count against the warrant's. And if Microsoft or Google start asking for the same term, the discount has become the market.