December 14, 2025 — Fermi Inc. (NASDAQ: FRMI, LSE: FRMI) is in the spotlight after a dramatic selloff tied to a sudden change in its earliest tenant and financing narrative for Project Matador, the company’s flagship “behind-the-meter” power-and-data campus planned for West Texas. The drop has intensified debate over whether FRMI is a long-term AI-infrastructure winner trading at a steep discount—or a pre-revenue execution story facing its first major stress test.
As of the most recent quote available heading into Sunday (markets closed), FRMI traded around $10.09 after a volatile week that included a heavy-volume plunge and a wide intraday range.
What moved Fermi stock: the $150 million construction funding agreement was terminated
The catalyst was a Current Report on Form 8‑K filed by Fermi Inc. disclosing that its “First Tenant” terminated an Advance in Aid of Construction Agreement (AICA) that could have advanced up to $150 million toward construction costs at the Project Matador site. Importantly, Fermi stated no funds had been drawn under the AICA, and the company said the parties continue negotiating lease terms tied to an earlier non-binding letter of intent (LOI). [1]
Key dates in the filing include:
- Sept. 19, 2025: Non-binding LOI signed with an investment-grade rated prospective tenant. [2]
- Nov. 3, 2025: AICA executed (up to $150M; no draws). [3]
- Dec. 9, 2025: LOI exclusivity period expired (midnight). [4]
- Dec. 11, 2025: Tenant notified Fermi it was terminating the AICA; lease discussions continue. [5]
Fermi also emphasized it had begun discussions with other potential tenants for 2026 power delivery and reiterated confidence in its broader schedule, citing robust demand for AI-related behind-the-meter power. [6]
Market reaction: a record selloff, extreme volatility, and “show me” skepticism
The market response was swift. Reuters reported FRMI shares plunged about 34% in Friday trading (Dec. 12), describing it as an early challenge for a newly listed, pre-revenue data-center real estate company whose investment case depends heavily on execution and tenant commitments. [7]
Financial Times coverage said the stock fell as much as ~46% intraday and noted the decline left shares down sharply from post-IPO highs, underscoring how quickly sentiment can reverse when an early-stage infrastructure developer loses a key commitment. [8]
Trading data also reflects the shock: FRMI’s session showed an unusually wide range (intraday high/low) and very heavy volume.
Analysts quoted by Reuters framed the move as a classic early-stage risk moment: when a company has few (or no) customers in place, “key client risk” can dominate the tape, and the bar rises for management to prove the model with signed, bankable agreements. [9]
Why this matters: Fermi is still pre-revenue, and tenant confidence is the business model
Fermi went public amid intense investor interest in AI-driven data center and power infrastructure, but it remains at a stage where commercial traction matters as much as engineering ambition.
Reuters’ IPO coverage highlighted that the company was founded in January 2025, raised $682.5 million in an upsized IPO priced at $21, and was still projecting no revenue in the near term while in development mode. [10]
Company filings have also stated that as of Sept. 30, 2025, Fermi had not generated revenue and expects to fund construction through a mix of equity, debt, and other sources including tenant prepayments—financing pathways that are not guaranteed. [11]
That combination—big capital needs + dependency on anchor tenants + pre-revenue status—is why the termination of a construction funding agreement (even one with no funds drawn) was taken so seriously by the market.
Project Matador explained: the thesis behind FRMI stock
Fermi markets itself as building a next-generation private power platform for hyperscale AI—essentially an integrated campus pairing power generation and data center infrastructure.
On its investor site, Fermi describes its plan as an 11‑gigawatt “behind-the-meter” private grid campus integrating natural gas, nuclear, utility power, solar, and battery storage to serve hyperscaler AI demand. [12]
Major outlets have repeatedly cited the same core ambition: a multi-phase Texas project designed to deliver up to 11 GW to support power-hungry AI data centers. [13]
This is why the market’s immediate question after the selloff became: Is the tenant pipeline real and financeable on Fermi’s terms—and how quickly can the company replace (or re-secure) the first anchor commitment?
The other major headlines investors are weighing (current as of Dec. 14, 2025)
While the AICA termination dominated trading, it wasn’t the only recent development. Over the past two weeks, Fermi disclosed several operational and project milestones that investors are now re-scoring under the lens of “execution vs. hype.”
1) Power supply milestone: up to 200 MW via Xcel Energy subsidiary (SPS), starting January 2026
On Dec. 5, Fermi announced a signed Electric Service Agreement with Southwestern Public Service Company (SPS), a subsidiary of Xcel Energy, providing up to 200 MW of electrical capacity to Project Matador—starting with 86 MW in January 2026 and ramping over time. [14]
For a project of this scale, that 200 MW is only a slice of the long-term 11 GW ambition—but it is a concrete step that can matter to prospective tenants and lenders evaluating near-term deliverability. [15]
2) Water and cooling strategy: MoU for hybrid cooling towers with MVM EGI
On Dec. 1, Fermi announced a non-binding MoU with MVM EGI focused on engineering and feasibility work for hybrid dry–wet cooling towers intended to support both combined-cycle natural gas generation and planned nuclear units at the campus. [16]
The company’s messaging around cooling is aimed at addressing a perennial issue for data centers and thermal generation—water use—which can influence community acceptance and permitting outcomes in West Texas. [17]
3) Permitting narrative: preliminary approval process for 6 GW natural gas component
In early November, Fermi also promoted preliminary progress around permitting for a large natural gas buildout component, positioning it as a milestone toward bringing the first large tranche of power online. [18]
4) Equipment and partners: Siemens Energy LOI for additional generation equipment
Fermi’s September announcements included a Siemens Energy LOI for additional gas turbine equipment and broader collaboration messaging around nuclear generation support, with a stated goal of accelerating delivery timelines into 2026. [19]
5) Financing headline before the reversal: talks for $4+ billion in project financing
On Nov. 25, Fermi publicly confirmed it was in discussions for $4+ billion in non‑recourse project financing for its first tenant, to be structured through a special purpose vehicle (SPV). [20]
That earlier financing headline now sits in tension with the AICA termination: investors are asking whether financing discussions can still progress on schedule without a fully executed lease and construction funding pathway.
Analyst forecasts and price targets: cuts, but not a collapse in coverage sentiment
Despite the shock, the analyst conversation has been nuanced: at least one firm cut its target sharply, while broader consensus targets remain far above the post-selloff price—reflecting both the upside narrative and the unusually high uncertainty.
Evercore ISI cut its target to $20 (from $37), maintained Outperform
Investing.com reported that Evercore ISI lowered its price target on Fermi to $20 from $37, while keeping an Outperform rating, following the AICA termination. [21]
(StreetInsider also reported a similar target change, though the full note is gated.) [22]
Where consensus targets sit now (as of Dec. 14, 2025)
Consensus aggregators continued to show average targets in the low-$30s:
- MarketBeat listed an average analyst price target around $31.56 (range roughly $27 to $37). [23]
- Zacks listed an average price target around $32.38 from eight analysts (with a range from $27 to $37). [24]
- Simply Wall St displayed an average 1‑year target around $30.25, with a low-end target of $20 and a high of $37. [25]
Important context: many of the early bullish targets in newly listed names often come from analysts at firms that were involved in underwriting or have relationships with the issuer—so investors typically weigh them alongside independent signals like lease execution, financing terms, and construction milestones rather than taking the targets at face value. (Several IPO-related coverage notes and bullish targets were discussed in earlier market coverage.) [26]
What Financial Times and Barron’s highlighted: pricing power and credibility
Two of the most widely shared analyses this week focused on why the tenant stepped back and what it implies for Fermi’s negotiating stance.
- The Financial Times reported that analysts attributed the breakdown to pricing negotiations, suggesting Fermi chose not to compromise on pricing in ways that could weaken future deals—while also stressing that the long-term demand backdrop for power-hungry AI infrastructure remains strong. [27]
- Barron’s emphasized the “worst day on record” nature of the drop and reminded readers Fermi is still pre-revenue, with execution milestones ahead (including early non-nuclear power targets) and partnerships cited by management. [28]
Together, these points frame the near-term investment debate: Was this a one-off negotiation hiccup—or an early sign that Fermi’s terms may be difficult to close with top-tier tenants at the scale and speed implied by the valuation?
Legal headlines: “investigation” announcements begin to circulate
Following the sharp decline, multiple law firms published notices stating they are investigating potential claims related to the stock’s move and disclosures. [29]
These announcements are common after large single-day drops in high-profile IPOs; they don’t necessarily indicate wrongdoing, but they can add noise—and sometimes headline risk—around an already volatile name.
What to watch next: the catalysts that could stabilize (or further pressure) FRMI
With the stock repriced sharply lower, the next set of catalysts is likely to determine whether FRMI becomes a “capitulation low” story or a continuing downtrend driven by uncertainty.
Here are the concrete items investors are watching:
- Definitive lease execution
Fermi’s own 8‑K indicates lease negotiations continue with the first tenant even after the AICA termination. A signed lease would likely be the most direct confidence signal. [30] - A replacement tenant (or additional tenants) for 2026 power delivery
The company disclosed it has opened discussions with other potential tenants for power delivery in 2026. [31] - Clarity on project-level financing
After confirming talks for $4+ billion in project financing in late November, investors will look for whether those discussions advance, change counterparties, or pause. [32] - Near-term grid power delivery
The SPS/Xcel agreement calls for 86 MW beginning January 2026, scaling to 200 MW—an execution milestone that may be referenced in future tenant negotiations and construction scheduling. [33] - Follow-through on enabling infrastructure (cooling, permitting, equipment delivery)
The hybrid cooling MoU and the broader permitting/equipment narrative are intended to demonstrate “intent to execution.” Investors will want timelines, contracts, and capex plans that stand up to scrutiny. [34]
Bottom line: Fermi stock is now priced for doubt—but the story will be decided by contracts
As of Dec. 14, 2025, Fermi Inc. stock (FRMI) has shifted from an AI-infrastructure momentum trade to a high-volatility execution test. The company’s core pitch—private, behind-the-meter power at scale for hyperscaler AI—targets a real and growing constraint in the AI economy. [35]
But this week’s funding-agreement termination exposed what skeptics have warned about since the IPO: until Fermi consistently converts LOIs and announcements into definitive leases, financeable structures, and on-time buildout milestones, the equity can reprice violently on any sign of friction.
References
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