Is Generac Holdings (GNRC) The Best Small-Cap AI Data Center Stock to Buy Now?

We recently published Top 10 Buzzing Stocks to Watch as Analysts Predict AI-Led Bull Market Will Continue. Generac Holdings Inc (NYSE:GNRC) is one of the top buzzing stocks to watch.

Chris Retzler, Needham portfolio manager, said in a recent program on CNBC that small-cap stocks have strong growth potential amid the Fed’s rate cut cycle. He believes money will “flow” into small-cap stocks in the near future. Generac Holdings Inc (NYSE:GNRC) is one of the favorite picks of the analyst. The company makes backup power generation products for residential, light commercial and industrial markets. Here is why the analyst likes the stock:

“Generac is one, as you mentioned. They have a data center play where they have diesel backup generation, and they’re coming out with new products there that would be competing with some of the incumbents. But the demand for backup generation is sizable for data centers.”

Diamond Hill Small-Mid Cap Fund  stated the following regarding Generac Holdings Inc. (NYSE:GNRC) in its second quarter 2025 investor letter:

 “Despite markets’ relatively sharp bounce following April’s downward volatility, we were able to initiate several new positions in the quarter at what we consider compelling valuations: Generac Holdings Inc. (NYSE:GNRC), Alaska Air Group, Knife River Corporation, Taseko Mines, Century Communities and FTI Consulting.

Generac Holdings is a leading energy technology solutions manufacturer with a dominant position in residential home standby power and a diverse offering of energy solutions. We anticipate the combination of increasing electricity usage and electrical grid instability will drive growing demand for Generac’s products. While the market seems to have focused on near-term consumer weakness and potential tariff-related headwinds, we believe the long-term outlook is constructive and capitalized on a discounted valuation relative to our estimate of intrinsic value to initiate a position.”

While we acknowledge the potential of GNRC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.