Fermi signs $6.5 billion data center lease with TensorWave

Fermi Inc. secured its first binding customer lease, a 15-year, $6.5 billion agreement with AI cloud provider TensorWave for 222 megawatts at its Texas Project Matador campus, confirming the developer's buildout strategy.

"A lease of this size and this term is a tremendous vote of confidence in Fermi," Marius Haas, chairman of the board at Fermi, said.

The lease between Fermi's subsidiary Fermi Campus 1 LLC and TensorWave TEX1 LLC covers a facility supported by 222 MW of total facility power, with expansion rights for two additional data centers that would bring the partnership to more than 650 MW across three phases. Once fully delivered, the facility is expected to support tens of thousands of AMD Instinct GPUs for large-scale AI training and inference. Construction at Project Matador is underway, with roughly 6 gigawatts of the planned 17 GW already permitted and more than $1.5 billion invested in the buildout to date. First power is targeted for 2026, with phased delivery beginning in the second half of 2027.

The deal gives Fermi a path to deliver AI data center capacity in a market where many projects are still raising capital or blocked by permitting issues. Fermi shares jumped 26 percent in after-hours trading Monday to $7.41, after closing the regular session at $5.87.

TensorWave, an AI cloud provider backed by Magnetar, AMD Ventures, Maverick Silicon, Nexus Venture Partners and Western Frontier, operates one of the world's largest all-AMD GPU clouds. "Our customers need hundreds of thousands of AMD Instinct GPUs in aggregate, on timelines they can count on," Darrick Horton, chief executive and co-founder of TensorWave, said. "Fermi has assembled the power, land, and permits to deliver at that pace."

The lease carries two renewal options of five years each, extending the potential term to 25 years. Fermi expects certain obligations under the lease to be guaranteed by one of the global leaders in AI, though the guarantor was not identified. The agreement contains customary conditions, including receipt of requisite project guaranties and financing.

The Texas Tech University System, which partnered with Fermi on the project, said it supports the transaction and intends to work toward a successful closing. Fermi continues to advance discussions with additional hyperscale, neo-cloud and enterprise compute counterparties for capacity at Project Matador.

Power access shapes the AI buildout

The deal arrives as power access becomes the limiting factor in AI infrastructure. Hyperscalers and cloud providers are competing for large-scale, reliable electricity, with many projects stalled by permitting delays or incomplete financing. Fermi's Project Matador, a site in the Texas Panhandle more than half the size of Manhattan, is designed to deliver power behind the meter on a private grid, with a planned ramp to approximately 17 GW.

The scale of the Fermi-TensorWave agreement stands out against comparable deals. Riot Platforms, the bitcoin miner pivoting to AI hosting, signed a 20-year lease for 191 MW of AI data center capacity, roughly 14 percent smaller than Fermi's first phase. The comparison shows how Fermi's 222 MW initial commitment, with expansion rights to more than 650 MW, ranks among the larger AI data center leases announced this year.

The deal also strengthens AMD's position in AI infrastructure. TensorWave's commitment to deploy tens of thousands of AMD Instinct GPUs at the facility shows the chipmaker's push to challenge Nvidia's dominance in AI accelerators. AMD has been expanding its data center GPU lineup as cloud providers seek alternatives to Nvidia's processors, and the Fermi lease gives AMD a large-scale deployment anchor.

For investors, the lease converts Fermi's land and permitting position into contracted revenue, a key step for a developer that listed on Nasdaq and the London Stock Exchange. The after-hours jump to $7.41 suggests the market had not fully priced in the deal. Fermi's ability to convert its remaining pipeline of lease discussions into binding agreements will determine whether the stock holds those gains.

This article is for informational purposes only and does not constitute investment advice.