Key Takeaways:
Fermi's first binding tenant lease at its Texas AI campus hands the company a $6.5 billion revenue stream and a template for the "secure power first" era of data center development.
Fermi Inc. signed its first binding customer lease Monday, a $6.5 billion, 15-year agreement with AI cloud provider TensorWave for 222 megawatts at its Project Matador campus in Carson County, Texas, ending months of financing and governance turmoil that had cast doubt on the project.
"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 turnkey facility, delivered in phases from the second half of 2027, is expected to house tens of thousands of AMD Instinct GPUs for large-scale AI training and inference. Expansion rights for two additional data centers would lift the partnership past 650 megawatts across three phases, with two five-year renewal options extending the term to as long as 25 years.
The agreement hands AMD a fresh beachhead against Nvidia's dominance in AI accelerators and gives Fermi, which reported no operating revenue as of March 31, its first contracted cash flow. Shares jumped 35% in after-hours trading Monday, according to Investing.com data.
The deal crystallizes the central constraint of the AI buildout: hyperscalers and cloud providers are competing for large-scale, reliable electricity, and many projects have stalled on permitting or financing. Fermi's pitch is that it secured the land, permits and power before signing tenants. Project Matador, spanning more than half the area of Manhattan, is designed to deliver behind-the-meter power on a private grid, with about 6 gigawatts of a planned 17 gigawatts already permitted and more than $1.5 billion invested in construction. First power is targeted for 2026.
The scale stands out against comparable transactions. Riot Platforms, a bitcoin miner pivoting to AI hosting, signed a 20-year lease for 191 megawatts of AI data center capacity — roughly 14% smaller than Fermi's initial phase.
TensorWave, a Las Vegas-based provider running one of the world's largest all-AMD GPU clouds, raised $350 million in June at a $1.55 billion valuation in a round co-led by AMD Ventures and Magnetar. CEO Darrick Horton said customers need "hundreds of thousands of next-generation AMD Instinct GPUs in aggregate, on timelines they can count on," and that Fermi had assembled the power, land and permits to deliver at that pace.
The lease follows a bruising stretch for Fermi, co-founded by former Texas Gov. and U.S. Energy Secretary Rick Perry. A nonbinding letter of intent with an earlier prospective tenant collapsed in December when that company terminated a funding agreement worth as much as $150 million, contributing to a sharp stock decline and a shareholder lawsuit Fermi has denied. The board removed co-founder Toby Neugebauer as chief executive in April, and Chief Financial Officer Miles Everson resigned the same month. Fermi raised $431.25 million through convertible notes in July.
The project also faces regulatory and community scrutiny. Gov. Greg Abbott ordered state regulators in August to audit data centers seeking grid connections, including their water use and infrastructure costs. Amarillo approved selling Fermi as much as 2.5 million gallons of water per day in October, over a dissenting council vote, and Fermi has said its cooling systems would consume about 80% less water than conventional designs.
Fermi expects certain obligations under the lease to be guaranteed by an unidentified "global leader in AI," and the agreement remains subject to project financing and guarantees. The Texas Tech University System, a project partner, said it supports the transaction. Fermi said it continues talks with hyperscale, neo-cloud and enterprise customers for remaining capacity at the campus.
For investors, the lease is a validation of the land-and-power model at a moment when AI infrastructure demand is outpacing supply. Fermi shares, which had traded down sharply on the earlier tenant collapse, now carry a contracted revenue base that did not exist a week ago. The question is whether the company can close financing and deliver on a 2027 timeline — and whether the unidentified AI guarantor signs on.
This article is for informational purposes only and does not constitute investment advice.
