Fermi (FRMI) Stock Soars 16% After Securing Massive $6.5B TensorWave Data Center Agreement

Key Highlights

• Shares of Fermi climbed 16% to $6.82 during premarket hours following the disclosure of its inaugural data center lease agreement
• TensorWave, an AI cloud infrastructure provider, signed a 15-year contract representing roughly $6.5 billion in aggregate contracted revenues
• The agreement encompasses 222MW of power capacity at Fermi’s Project Matador facility located in Amarillo, Texas
• Optional expansion provisions could elevate the total collaboration to exceed 650MW spanning multiple data center locations
• Investment firm Mizuho maintained its Outperform recommendation with an $11 price objective after the news broke

Shares of Fermi (FRMI) experienced a significant 16% premarket rally to $6.82 on Tuesday morning following the company’s announcement that it had secured its inaugural tenant for the Project Matador data center campus situated in Amarillo, Texas.

Fermi Inc. Common Stock, FRMI

The agreement represents a 15-year lease arrangement with TensorWave, an artificial intelligence cloud infrastructure provider, generating approximately $6.5 billion in aggregate contracted revenue. The magnitude of this figure immediately captured the attention of financial markets.

According to the terms disclosed, Fermi will handle the development, construction, and delivery of data center facilities to TensorWave through a comprehensive turnkey structure. TensorWave plans to begin occupancy in multiple stages commencing during the latter half of 2027.

The opening phase of the project encompasses 222MW of aggregate power capacity. Additionally, the lease agreement incorporates expansion options for two supplementary data center facilities.

Should TensorWave exercise these expansion clauses, the comprehensive partnership could scale beyond 650MW. This would represent a substantial increase from the original transaction parameters.

Fermi’s Chairman Marius Haas characterized the agreement as a “tremendous vote of confidence” in the organization. He emphasized that securing this lease represented the company’s highest priority objective since May of the previous year.

Extended Search for Data Center Tenant

The path to this milestone proved challenging. Fermi had experienced considerable difficulty identifying a leasing partner for the expansive 7,570-acre Amarillo property.

These challenges generated internal complications. The company’s former CEO Toby Neugebauer was terminated in April, with industry observers suggesting his departure was connected to the protracted timeline for tenant acquisition.

Prior to Tuesday’s disclosure, Fermi shares had declined 27% during the current calendar year. While the 16% premarket surge reduces that deficit, the equity still requires additional recovery.

Rick Perry, Fermi’s co-founder and former U.S. Secretary of Energy as well as former Texas Governor, had articulated aspirations to construct the planet’s most expansive data center at this location. Tuesday’s lease represents the initial concrete advancement toward realizing that vision.

Analyst Maintains Bullish Stance

Mizuho reaffirmed its Outperform assessment of Fermi shares following the announcement, preserving its $11 price objective.

The equity currently trades at $5.88 based on Investing.com data, which indicates InvestingPro analysis points to the company being undervalued compared to its Fair Value calculation.

Mizuho had previously adjusted its price target downward from $27 to $11 as a result of postponements in tenant commitments. The firm characterized this lease execution as the long-anticipated positive catalyst.

Mizuho’s prior projections anticipated 500MW becoming operational during 2027 with an additional 500MW following in 2028.

Regarding capital structure developments, Fermi recently completed an issuance of $431.25 million in convertible senior notes carrying a 5.00% coupon rate, with maturity scheduled for 2031.

The organization also priced $375 million in convertible senior notes earlier in 2026. A separate $350 million convertible debt offering had previously triggered a decline in share price.

InvestingPro identified that Fermi is currently experiencing rapid cash consumption, although the $6.5 billion contract could materially alter that financial trajectory moving forward.

Mizuho sustained its Outperform designation on the shares after conducting direct conversations with company leadership regarding the agreement’s specific terms.

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