Shares of Fermi Inc. rose 13.2% before the opening bell Tuesday and closed up about 18% at $3.84, on volume of 59.4 million shares, more than triple the stock’s 100-day average. The move followed an announcement whose shape says something about how the artificial-intelligence build-out is now financed: a credit support agreement.
Fermi, a data-center-focused real estate investment trust listed in New York and London, said AMD agreed to provide credit support for the lease covering the first phase of Project Matador, an energy and computing campus in Carson County, Texas. That phase carries 222 megawatts of gross power capacity, matching the customer lease Fermi disclosed on Aug. 10. The two companies signed a separate framework agreement covering expansion of up to 650 megawatts of gross capacity, which would span a second and third phase.
The distinction matters because of what Fermi sells. The company designs no chips and trains no models. It builds a private electric grid in the Texas Panhandle and rents powered space behind the meter, which means its revenue depends on a tenant willing to sign a lease and lenders willing to fund the equipment behind it. A credit support agreement from a company of AMD’s size answers the second question, at least for the first phase.
“We are thrilled to partner with AMD as we advance development at Project Matador,” Fermi Chief Executive Lee McIntire said in a statement. “Our strategic partnership establishes a framework for phases two and three.”
Mathew Hein, AMD’s senior vice president and chief strategy officer for corporate development, said the collaboration would help customers deploy AMD-powered systems at scale and support the chipmaker’s data-center momentum.
For Fermi, the agreement is the newest in a run of supply and construction arrangements. Six Siemens Energy SGT-800 gas turbines and their generators have arrived at the Port of Houston, the company said, after an earlier shipment of three larger SGT6-5000F units. Primoris Energy Services is handling engineering and construction. NAES will operate and maintain the turbine fleet, and CBRE will run the first data center. Site work on power, water and fiber is already under way, according to people familiar with the schedule.
The ambition runs far beyond the first phase. Fermi says it has invested more than $1.5 billion in Project Matador to date and, subject to binding customer agreements, expects the campus to reach roughly 17 gigawatts. The contemplated generation mix includes natural gas, nuclear, utility interconnection, solar and battery storage. A separate agreement with Hillcore Energy Capital outlines a power center of about 2.6 gigawatts.
Analysts who follow data-center landlords read Tuesday’s agreement as a financing event dressed as a partnership. “Credit support means standing behind a lease, not writing a check,” one analyst said, asking not to be named because her firm works with Fermi. “The equity market priced it as though the tenant had signed and the capital had arrived.”
That reading fits the arithmetic of the business. A private grid of the size Fermi describes requires equipment orders measured in the billions before a single server is installed, and lenders price that risk off contracted revenue rather than projected demand. Every signed lease lowers the cost of the next tranche. The framework agreement with AMD, if it converts into leases for phases two and three, does the same work again at larger scale.
The agreement also says something about AMD’s position. The company has spent two years pushing rack-scale systems built around its accelerators into facilities designed for its larger rival, and access to power now determines whether a data center opens on schedule. Backing a campus that already holds land, permits, water rights and a turbine queue buys AMD a place in the line without owning the asset. Whether AMD’s chips are what eventually fill the halls is a separate question the agreement does not settle.
The skeptics point at what has not been disclosed. Fermi did not publish the terms of the credit support, its duration, or the conditions under which it lapses. It has not named the tenant behind the 222-megawatt lease, and it has announced no lease for any later phase. The stock, at $3.84, is a small-cap price for a company that has spent heavily and collected little revenue so far. One person close to the company said talks on a second phase are further along than the public record shows, a claim the market cannot yet verify.
The larger question is whether the campus can be filled. Power is scarce in the Texas Panhandle and scarcer across the industry, and a developer that controls generation on its own land gains an edge with every delay at a utility. But a grid is not a business until someone plugs into it, and the credit of the customer, not the capacity of the turbines, determines what it is worth.
Fermi’s shares now trade on the expectation that leases will follow. The AMD agreement moves that expectation one phase closer and leaves the harder phases untouched. The next test is a second lease, and the company has not said when it will come.
