Fermi Stock Heads for Worst Day on Record as AI-Energy Company Loses Funding Commitment From First Major Tenant

Fermi is building a massive grid in the Texas Panhandle to power artificial-intelligence data centers. (Courtesy Fermi America)

Key Points

• Fermi plunges after a $150 million funding deal for Project Matador falls through.
• A potential tenant terminates an agreement to advance up to $150 million for construction costs at Fermi’s Project Matador.
• Fermi, which has yet to generate revenue, is developing Project Matador, a Texas-based grid to supply 11 gigawatts to data centers.

Fermi stock plunged on Friday after the energy and real estate company said a $150 million funding deal with one of its power grid’s potential tenants had fallen through.

Fermi has been continuing site work at Project Matador, a Texas-based grid that it said will supply 11 gigawatts of power to the massive data centers that power artificial intelligence.

However, the project appears to have hit a snag. Fermi disclosed in a securities filing Friday that it had lost a funding commitment from a potential tenant earlier this week.

On Sept. 19, the company entered into a nonbinding letter of intent with what it called an investment-grade rated tenant to lease part of the Project Matador site. The parties entered into a subsequent agreement in November, with the tenant agreeing to advance up to $150 million to fund construction costs. No funds were drawn under the agreement.

The exclusivity period provided in the letter of intent expired on Dec. 9. Two days later, the tenant notified Fermi that it was terminating the November agreement for the $150 million funding commitment.

In spite of this development, “the parties continue to negotiate the terms of a lease agreement at Project Matador pursuant to the letter of intent,” Fermi wrote in the filing.

The company asserted it was “confident” it could meet the expected power delivery schedule at Project Matador, “as the demand for behind-the-meter power for AI remains robust over the near and long term.”

Fermi shares cratered 30% to $10.68 on Friday, putting them on pace for their largest single-day percentage drop on record as well as a record closing low, according to Dow Jones Market Data. The stock began trading on the Nasdaq and the London Stock Exchange through a simultaneous dual listing in October.

Evercore ISI analyst Nicholas Amicucci noted that the November agreement “validated a certain level of commitment from Fermi’s potential first tenant.” Its termination calls into question the letter of intent, he said.

“We continue to believe in the scarcity value of an electron,” Amicucci wrote, referring to power. “However, we would be naïve to believe shares would not be negatively impacted by this announcement.”

Fermi, at less than a year old, hasn’t generate any revenue. It was founded at the start of 2025 with the aim of building the world’s largest data-center campus, and says it remains on course to begin producing power from nonnuclear sources by 2026.

Amicucci, for one, believes the company can stick to that goal. “We continue to be firm believers in Fermi’s ability to deliver on its build-out on-time,” he wrote. “Based on knowledge of the entirety of the power ecosystem, view Fermi as a key foundational holding for any investor seeking exposure to the secular AI/datacenter/power demand thematic.”

As recently as November, Fermi indicated it was running behind schedule on negotiations with its first major tenant, which is now known to be the tenant that backed out of the funding agreement.

Fermi’s Project Matador site includes the Donald J. Trump Generating Plant, which will generate power for hyperscalers. One of its three founders, Rick Perry, served as Texas governor and briefly as energy secretary during President Donald Trump’s first term.

For now, Fermi appears to be subscribing to the belief that if it builds the infrastructure, the customers will come. The company struck a 99-year lease with Texas Tech University earlier this year and told shareholders on its most recent earnings call that it had cleared an 85-acre swath of land in the Texas Panhandle.

Just last week, Fermi said it had signed an agreement with Southwestern Public Service to provide up to 200 megawatts of electricity to the Project Matador campus. The company has entered into nonbinding agreements with other companies including Hyundai Engineering and Construction and Siemens Energy ahead of the construction process.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com