New York, July 9, 2026, 18:13 (EDT)
- Fermi shares dropped about 17% in after-hours trading after the company announced a proposed convertible note sale.
- With this debt, disclosed indebtedness would rise to almost $789 million on a pro-forma basis as of March 31.
- IEEFA raised questions about both the price and approval route for Fermi’s planned nuclear cooling system in a same-day report.
Fermi Inc. NASDAQ:FRMI dropped after hours Thursday as the AI power-campus developer announced a $350 million convertible senior note deal. The new financing gives Fermi added cash, but investors zeroed in on dilution, higher debt, and the company’s ability to deliver on its projects.
Fermi is pushing to get Wall Street backing for a high-cost AI plan: build its own power grid and data center complex in Texas before it lands firm tenants. Shares ended the day at $7.32, off 0.54%. After hours, the stock dropped to about $6.07, down roughly 17%, MarketScreener data showed.
Fermi said the notes will mature in 2031. The size could grow by $52.5 million if initial buyers take up an option. The company plans to use some of the money for capped call deals, which help limit share dilution if the notes are converted later. The rest will go toward general corporate purposes.
Leverage is the sticking point for investors. Fermi’s offering memo showed pro-forma cash and equivalents at $557.5 million as of March 31, before any extra notes, with total debt jumping to $789.1 million from $439.1 million. The company also reported just $92.0 million in cash and equivalents as of June 30, which includes $29.2 million in restricted cash.
| Fermi capital snapshot | Actual, March 31 | Pro forma after notes |
|---|---|---|
| Cash and equivalents | $207.5 mln | $557.5 mln |
| Restricted cash | $35.8 mln | $35.8 mln |
| Total indebtedness | $439.1 mln | $789.1 mln |
| Shareholders’ equity | $1.07 bln | $1.07 bln |
With 629.8 million shares outstanding as of March 31, Fermi’s after-hours share price values its equity at about $3.8 billion. The company’s proposed $350 million convertible note would represent around 9% of that total. If the add-on feature is fully exercised, the notes would total $402.5 million, or 10.5%. That doesn’t mean instant dilution, but it’s a heavy financing hangover for a business with no revenue yet.
Fermi said in the filing it’s had early discussions with seven possible tenants and 12 possible JV partners. Talks are further along with a smaller set. The company warned those potential deals could mean issuing a “material” amount of new shares, which could pressure the stock price.
A separate issue hit the project too. The Institute for Energy Economics and Financial Analysis said Thursday that Fermi still hasn’t settled on how it will cool its four planned nuclear reactors. The group argued the company shouldn’t go ahead without Nuclear Regulatory Commission approval for a first-of-its-kind hybrid cooling system. Report author Dennis Wamsted said the system’s cost isn’t clear yet but “there is no doubt it is going to be extremely high.” He added that no big U.S. reactor has used anything other than water for cooling. IEEFA
| Investor issue | What changed Thursday | Why it matters |
|---|---|---|
| Financing | $350 mln convertible-note plan | Lifts cash, but pushes up debt and future dilution risk |
| Tax status | REIT election deferred | Leaves uncertainty over real-estate trust plan |
| Project risk | New cooling-system critique | Sparks questions on costs, timeline and NRC sign-off |
| Commercial proof | Tenant/JV talks disclosed, no binding deal cited | No anchor tenant yet for investors |
Fermi said it’s pushing back its plan to become a real estate investment trust. Normally, a REIT passes most of its income to shareholders, but for now Fermi said it will stick with C corp status through the short tax year ending Dec. 31, 2025. The company also said it’s not promising a REIT election for 2026.
Fermi has some tough competition. Digital Realty Trust NYSE:DLR and Equinix NASDAQ:EQIX already have global data-center networks. Fermi still needs to turn land, permits, turbines, financing, and tenant deals into revenue. Its latest quarterly filing said no revenue-generating activities had started as of March 31. The company expects almost all revenue to come from leasing to hyperscalers.
The broader market didn’t help Fermi. The Nasdaq Composite climbed 1.30% Thursday and the S&P 500 added 0.81%, with chip stocks out front, but AI names stayed jumpy. “This is still very much an AI bull market,” Ross Mayfield, investment strategy analyst at Baird, told Reuters. He cautioned the wider rally needs oil prices and rates to hold steady. Reuters
The note offer may give Fermi time but leaves questions open. If terms are weak, if it can’t land a tenant or a JV, or if nuclear cooling approval drags out, the capped call probably won’t ease fears about dilution or funding needs. But if a real anchor customer comes through, the same deal could seem less like a defensive move. Investors so far acted as if the balance sheet outpaced operations.
