Fermi Inc. (FRMI) saw its stock price soar 22.6% on Wednesday, closing at $6.89, and continued to trade higher at $6.91 in early Thursday's pre-market session. The sharp rally was triggered by a report that OpenAI is in discussions to lease a massive 10-gigawatt data center project in Ohio, potentially backed by Nvidia. Investors quickly linked this development to Fermi's own ambitious AI campus plans, known as Project Matador, despite the company still lacking signed tenant agreements.
Market Context and Implications
According to a Reuters report citing The Information, OpenAI is negotiating a 20-year lease for the Ohio site, which could cost at least $500 billion, with the first phase expected to be operational by 2028. Neither OpenAI nor Nvidia responded to requests for comment, and Reuters noted it could not independently verify the story. Nevertheless, the market interpreted this as a positive signal for Fermi's prospects, particularly given the hyperscale AI demand for power-ready infrastructure.
Citizens, in a report on TipRanks, highlighted that the Ohio news is favorable for the chances of a major lease at Fermi. They noted that hyperscale AI buyers are increasingly prioritizing 'time-to-power'—the speed at which a site can be ready with electricity for compute. Citizens pointed to Fermi's permitted and potential 2027 powered capacity as a key attraction. Fermi's Project Matador spans over 7,500 acres in Carson County, Texas, and is designed to deliver up to 17 gigawatts at full scale, using a mix of lower-carbon natural gas, advanced nuclear, solar, and battery storage. The company has already secured more than 2 gigawatts in owned and contracted supply, obtained a Texas permit for approximately 6 gigawatts of clean-air generation, and has another permit for around 5 gigawatts pending.
Financial and Governance Challenges
Despite the rally, Fermi faces significant hurdles. The company's most recent quarterly filing shows it has not yet signed any binding tenant agreements, meaning it has not booked any revenue. As of March 31, Fermi held $243 million in total cash and restricted cash, with $421 million in outstanding debt. It secured $785 million in new equipment finance facilities during the quarter but reported a net loss of $189 million, driven largely by non-cash stock compensation and a debt-extinguishment loss. Capital expenditures on property, plant, and equipment totaled $441 million for the quarter, bringing the gross balance to about $1.4 billion.
Governance issues also loom. On June 10, a group led by co-founder and former CEO Toby Neugebauer filed an SEC statement indicating plans to file a definitive proxy statement and green agent-designation card, with a special shareholder meeting expected around June 30. Neugebauer's camp has previously pushed for a strategic review, which could involve a sale or strategic partnership to de-risk Project Matador. The company's board is resisting, with an independent committee unanimously deeming the solicitation not in shareholders' best interests, warning that it could give one shareholder near-total control.
Additionally, a regulatory notice on June 11 disclosed that some restricted common stock awards vested for several executives and managers, with shares sold to cover tax obligations. Those involved included Miles Everson, Jacobo Ortiz Blanes, Charles Lynn Hamilton, and Mesut Uzman or related persons.
Outlook
The recent rally may be fragile, as Fermi still lacks a confirmed tenant lease. The company's 10-Q filing underscores that it had no revenue by March 31, no tenant agreements, and is contending with debt covenants, project financing, leadership changes, and missed tenant goals. The next critical test is whether Fermi can secure a binding tenant or strategic deal amid the AI power buzz and before the June 30 proxy fight, all while managing funding pressures.
