Shares of Fermi plunged 40% on Friday after the data-center real estate investment company disclosed that a prospective anchor tenant had terminated a funding agreement tied to its marquee Texas project.
The decision, affecting a commitment of up to $150 million for construction of Project Matador, marks the sharpest setback yet for the newly listed company.
The tenant, whose identity has not been disclosed, had agreed to lease part of the Project Matador site and advance capital for its development.
Although the underlying lease discussions remain active, the financing portion of the deal has been scrapped.
Fermi confirmed in a filing that no funds were drawn before the termination.
Letter of intent expires, support evaporates
The breakdown stems from a non-binding letter of intent signed in September with what Fermi described as an investment-grade tenant.
As negotiations progressed, a follow-up agreement was signed in November outlining the $150 million advance.
When the exclusivity period expired on December 9, the tenant formally withdrew from the financing arrangement two days later.
Despite the setback, both sides are still negotiating a potential lease under the September letter of intent.
Fermi said it remains “confident” that it can meet power-delivery timelines at Project Matador, citing strong near- and long-term demand for behind-the-meter power driven by AI workloads.
Early challenge for a high-profile debutant
The development is an early test for Fermi, which has yet to generate any revenue but entered the market in October at a valuation of $14.8 billion.
Founded this year by former US Energy Secretary Rick Perry and two partners, the company pitched itself as a future cornerstone of AI-era infrastructure by developing one of the world’s largest data-centre campuses.
Strong enthusiasm around AI helped propel its debut, but the sharp reversal underscores a more cautious mood surrounding speculative AI-related names.
Investors are becoming more selective, demanding clearer paths to cash flow and closer scrutiny of unbuilt projects.
Fermi’s market cap has now fallen to $9.36 billion, according to LSEG data, and the stock is down 39% from its listing.
It last traded at $9.08, well below its IPO price of $21.
Project Matador faces mounting scrutiny
Fermi’s flagship development, Project Matador in Amarillo, Texas, includes the Donald J. Trump Generating Plant, intended to supply power to hyperscalers.
The company plans to develop 11 gigawatts of capacity by 2038—comparable to the needs of entire US states.
Its ambitions hinge on a mix of nuclear and natural-gas-based power.
Fermi aims to complete its first large nuclear reactor by 2032, an aggressive timetable given the industry’s history of delays and cost overruns.
In the near term, it expects natural-gas infrastructure to bridge the gap.
As recently as November, the company acknowledged it was behind schedule in securing its first major tenant.
The disclosure that the same tenant has now withdrawn from the funding agreement will reinforce investor concerns about timelines and execution risk.
Caution heightens as AI-energy optimism cools
While demand for power-hungry AI systems remains robust, investors have grown more cautious about companies promising to build vast energy and data-center infrastructure before achieving any commercial foothold.
Seven brokerages still rate the stock a “buy” or higher with a median price target of $33, but the latest setback adds pressure on Fermi to secure firm agreements that validate its long-term strategy.
With negotiations ongoing, the next several months will be crucial in determining whether the company can regain momentum—or whether early enthusiasm for its bold infrastructure vision will continue to wane.
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