Why is Weichai Power stock rallying today?

On Thursday, Weichai Power's stock surged by 4.4% to HK$30.86 after its customer, Generac, inked a significant data-center supply agreement with Amazon Web Services. The deal, initially valued at $2.4 billion, sees Generac supplying Amazon with backup power generators for its data centers, and Amazon taking a stake in Weichai. The generator line of Generac is based on Weichai's Baudoin M55 engine platform, and additional supply agreements for the U.S. firm suggest more orders for Weichai.

The market has already factored in Weichai's exposure to the data center sector, with shares jumping over 130% in Shenzhen over the past year and nearly tripling on the Hong Kong stock exchange, driven by demand for generators linked to the AI-driven electricity gap. This surge saw Weichai power past a 0.9% decline in the Hang Seng index.