Shares of Fermi surged in trading on Tuesday after the data center developer announced it had secured its first major tenant for its Project Matador campus in Amarillo, Texas.
The stock FRMI climbed 23% to $7.24 after the company disclosed a 15-year lease agreement with AI cloud provider TensorWave.
The contract is expected to generate approximately $6.5 billion in revenue over the lease term.
Under the agreement, Fermi will develop, construct and deliver data centers for TensorWave, which will take occupancy in phases. The phased lease is scheduled to begin in the second half of 2027.
The deal marks a significant milestone for the company, which has spent months searching for a tenant for its flagship Texas campus.
Lease strengthens Project Matador ambitions
The agreement includes expansion rights for two additional data centers, which could increase the partnership to more than 650 megawatts of capacity if exercised.
Fermi said the lease validates its long-term strategy for Project Matador, a 7,570-acre campus that the company aims to develop into the world’s largest data center complex.
Chairman Marius Haas described the agreement as a key achievement for the company.
“A lease of this size and this term is a tremendous vote of confidence in Fermi,” Chairman Marius Haas said in a media release. “In delivering this first binding agreement, we’ve now fulfilled the most important objective we shared with the market in May.”
The announcement follows a challenging period for the company.
Fermi struggled to secure an anchor tenant for the project, contributing to tensions with former Chief Executive Officer Toby Neugebauer, who was dismissed in April.
Analysts remain cautious despite positive catalyst
While the TensorWave agreement has been welcomed by investors, analysts continue to view Fermi as a high-risk investment given the scale of its long-term ambitions.
Seeking Alpha noted that the company remains a speculative play despite the recent rally, highlighting significant construction, financing and execution risks associated with its planned 17-gigawatt Texas data center campus and nuclear-powered infrastructure strategy.
The research platform also described the initial lease as relatively modest compared with Fermi’s broader ambitions, while acknowledging that securing a first customer demonstrates the company’s ability to win commercial contracts.
Mizuho reiterated its Outperform rating and maintained its $11 price target following the announcement, describing the lease as a long-awaited catalyst.
The brokerage had previously projected that Fermi could have 500 megawatts operational in 2027 and another 500 megawatts in 2028.
The 222-megawatt TensorWave agreement aligns with those expectations and provides greater visibility into the company’s development timeline.
Although the initial lease covers only part of Project Matador’s planned capacity, the expansion rights included in the agreement could significantly increase the partnership if exercised.
With Mizuho’s $11 price target implying further room to run, some traders are likely to keep tracking FRMI through trading platforms in the weeks ahead.
The announcement provides Fermi with its first major source of contracted long-term revenue as it seeks to establish itself in the rapidly expanding AI infrastructure market
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