Fermi Inc. plunged nearly 46% after its first investment-grade tenant terminated a $150 million construction funding agreement, intensifying fears of an AI-driven power-infrastructure bubble. The company, once valued at $19 billion despite generating no revenue, has now lost more than two-thirds of its value in two months. Investor confidence is eroding across the broader AI-power ecosystem as developers struggle to secure binding contracts for massive data-center power needs.

Fermi Inc., a power-infrastructure developer founded earlier this year with ambitions to support the next generation of AI data centers, is facing its most severe stress test yet. Shares collapsed on Friday after the company disclosed that its first major tenant had canceled a $150 million agreement meant to fund its flagship AI campus in West Texas. The collapse of the arrangement, announced in a regulatory filing, has intensified scrutiny of whether the rapid expansion of AI-power projects has run ahead of reality.

A Stunning Reversal for a High-Flying AI Power Bet

The terminated agreement marks a symbolic blow for Fermi, which surged to a $19 billion valuation within months of going public—despite having no revenue and only early-stage plans for what it called the world’s largest private power grid. The proposed project, “Project Matador,” would require more than twice the electricity consumption of New York City, positioning Fermi as a central supplier to the emerging AI power economy.

But as the AI-infrastructure narrative exploded across markets in 2024 and 2025, investors began questioning whether developers could convert hype into binding, long-term contracts. Fermi’s sharp selloff underscores how vulnerable early-stage power developers are when they rely heavily on yet-to-materialize demand and counterparties that may renegotiate or walk away under shifting market conditions.

According to analysts, the tenant attempted last-minute pricing changes that Fermi deemed unacceptable—a detail that raises deeper questions about the economics of powering AI data centers in regions where infrastructure costs and energy market volatility remain high.

Broader Market Pressures Signal a Cooling AI-Power Cycle

Fermi’s setback comes amid a broader pullback in AI-linked infrastructure stocks. Shares of power producers, electrical-equipment manufacturers, and data-center developers fell Friday as sentiment weakened across the sector. Broadcom disappointed investors with its AI-computing revenue outlook, while Oracle delayed key data-center projects for OpenAI—two developments that reinforced the perception that the AI buildout may not scale linearly.

Investors are increasingly focused on which companies can secure firm, long-term purchase agreements rather than relying on speculative projections. Fermi, like several new entrants, faces competition not only from other startups but from established utilities, private-equity-backed developers, and long-standing power operators courting the same technology companies.

Fermi’s Path Forward: Uncertain but Not Closed

Despite the collapse of the $150 million agreement, Fermi retains the land lease with Texas Tech University and continues negotiations tied to an earlier letter of intent. Management indicated that discussions have opened with multiple new prospective tenants, and the company still targets initial power delivery in 2026.

For now, however, the credibility of Fermi’s long-term plan—eventually involving four large nuclear reactors—will depend on whether it can secure stable, well-capitalized partners in a rapidly tightening competitive landscape. With exclusivity provisions now expired, the company faces both an opportunity and a test: it can attract new buyers, but must do so in a market increasingly disciplined about execution.

Looking Ahead

The unraveling of Fermi’s first major tenant agreement is more than an isolated setback—it signals a maturing phase of the AI-power boom, in which investors demand measurable progress over visionary ambition. As data-center energy demand accelerates, the winners will likely be those capable of delivering reliable power under binding contracts, rather than those promoting the largest hypothetical buildouts. For Fermi, the coming months will determine whether it remains a frontrunner in the AI-power race or becomes one of its earliest casualties.