TLDR
- Fermi shares climbed 16% to $6.82 during premarket hours following disclosure of its inaugural data center tenant agreement
- TensorWave, an AI cloud services company, committed to a 15-year contract representing roughly $6.5 billion in aggregate revenue
- The agreement encompasses 222MW of power capacity at Fermi’s Project Matador facility located in Amarillo, Texas
- Additional expansion provisions could extend the collaboration beyond 650MW spanning multiple data center facilities
- Mizuho maintained its Outperform designation with an $11 target price after the deal announcement
Shares of Fermi (FRMI) skyrocketed 16% to $6.82 during Tuesday’s premarket session following confirmation that the data-center operator secured its inaugural tenant at the Project Matador development in Amarillo, Texas.
The arrangement represents a 15-year commitment with AI cloud infrastructure provider TensorWave, generating approximately $6.5 billion in cumulative contracted revenue. The magnitude of the transaction immediately captured market attention.
According to the terms, Fermi assumes responsibility for developing, constructing, and delivering complete data center facilities to TensorWave through a comprehensive turnkey model. TensorWave will begin occupying the facilities progressively, with the first phase commencing during the latter half of 2027.
The opening phase encompasses 222MW of aggregate power capacity. Additionally, the contract incorporates expansion provisions for two supplementary data center developments.
Should TensorWave exercise these expansion clauses, the combined partnership capacity could exceed 650MW. This represents a substantial escalation from the baseline agreement parameters.
Fermi Chairman Marius Haas characterized the agreement as a “tremendous vote of confidence” in the organization. He emphasized that securing this tenant represented the company’s highest strategic priority since May.
Fermi’s Extended Search for a Tenant
The path to this milestone proved challenging. Fermi had encountered considerable difficulty identifying a leasing partner for the expansive 7,570-acre Texas property.
These challenges generated internal turbulence. Former CEO Toby Neugebauer departed in April, with industry observers suggesting his removal stemmed partly from limited progress in tenant acquisition.
Prior to Tuesday’s revelation, Fermi stock had declined 27% during the current year. While the 16% premarket rally reduces that deficit, significant recovery remains ahead.
Fermi co-founder Rick Perry, who previously served as U.S. energy secretary and Texas governor, had articulated aspirations to construct the planet’s most expansive data center complex at this location. This tenant agreement represents the initial concrete advancement toward that vision.
Mizuho Maintains Outperform Stance
Mizuho reaffirmed its Outperform assessment on Fermi subsequent to the announcement, preserving its $11 price objective.
The equity currently trades at $5.88 per Investing.com data, with InvestingPro evaluation indicating the company appears undervalued compared to its Fair Value calculation.
Mizuho had previously adjusted its price target downward from $27 to $11 attributable to tenant signing postponements. The firm characterized this lease execution as the anticipated catalyst.
Mizuho had formerly projected 500MW becoming operational during 2027 with an additional 500MW activating in 2028.
From a capital perspective, Fermi recently finalized an issuance of $431.25 million in convertible senior notes bearing a 5.00% coupon, with 2031 maturity.
The organization also completed pricing on $375 million in convertible senior notes earlier in 2026. A distinct $350 million convertible notes offering had previously triggered downward pressure on the stock.
InvestingPro identified that Fermi continues depleting cash reserves rapidly, although the $6.5 billion contract may fundamentally alter that trajectory.
Mizuho sustained its Outperform rating following comprehensive discussions with company leadership regarding agreement specifications.
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