Fermi lands $200M prepayment for 600 MW, voids TensorWave lease

By Rebecca Stone

Fermi secured a $200 million prepayment from an undisclosed investment-grade hyperscaler for an initial 600 megawatts at Project Matador in the Texas Panhandle, with the capacity reserved for delivery beginning in 2027. A separate $15 million agreement covers early construction and site development at the private-grid data center campus.

Thursday’s disclosure also said the companies are finalizing a $90 million purchase agreement covering structural steel and building materials that Fermi bought in advance. Fermi said the agreement would give the customer use of long-lead materials needed to speed construction of multiple data halls.

What has the hyperscaler actually committed?

The $200 million prepayment provides upfront customer funding for the proposed 600 MW development, while the $15 million agreement establishes a framework for site preparation and construction to start as soon as possible. Neither document constitutes a lease; Fermi and the customer continue working toward a definitive long-term agreement, and the customer’s identity remains confidential.

Fermi said the customer is making financial and development commitments “ahead of finalizing a lease” because it wants access to power within its delivery timeline. The company’s investor presentation lists the 600 MW as reserved for 2027 by a “major hyperscaler.”

CEO Lee McIntire said: “Our headstart in speed to power is a key reason an investment-grade hyperscaler has signed up for 600 megawatts and committed more than $200 million up front.” He said that if Fermi converts its pipeline of prospective customers into leases, it “would completely fill our 2.2 gigawatts of current capacity.”

How much power can Fermi deliver?

Fermi’s investor presentation sets out a future power roadmap rather than reported operating capacity:

• 2027: Maximum power of 925 MW if all contracted turbines and equipment arrive.
• 2028: 1,332 MW.
• 2029: 2,000 MW of Fermi-owned generation, plus up to 200 MW from Xcel Energy.

Fermi’s “Powered Land+” model supplies power, land, water and fiber while the tenant builds the data halls. The company presents this as a capital-light entry point, with illustrative capital costs of $3.9 million to $5.1 million per megawatt of gross power, versus $12.1 million to $15.0 million for a turnkey facility.

Does the prepayment replace TensorWave?

Not yet. Fermi and TensorWave terminated the Data Center Lease and Services Agreement they signed in August 2026, and AMD’s associated credit support agreement also ended. Fermi disclosed no reason for either termination, erasing its first announced tenant.

TensorWave, an AI cloud provider built on AMD GPUs, had agreed to lease a turnkey Project Matador facility with 222 MW of total facility power, about $6.5 billion of contracted revenue over an initial 15-year term, and expansion rights that could take the relationship above 650 MW.

AMD signed a credit support agreement in October backing the 222 MW phase-one lease, and Fermi and AMD established a framework for up to 650 MW of expansion. Fermi called the AMD arrangement “a key milestone toward securing project financing.” At the time, closing the TensorWave lease and AMD’s obligations remained subject to conditions. Thursday’s release states only that both agreements have been terminated.

The hyperscaler’s 600 MW reservation is larger than TensorWave’s first phase, but it comes with a prepayment and construction agreement rather than a signed lease. Fermi therefore still has no binding long-term revenue contract for the campus and reports no revenue.

What does the balance sheet show?

Fermi’s third-quarter results show continued heavy investment alongside operating losses:

• Net loss: $141.6 million, or $0.22 per share, versus a $346.8 million loss, or $0.84 per share, in Q3 2025.
• G&A expense: $142.2 million, up from $37.8 million in Q3 2025.
• Capital spending: $133.4 million in Q3 2026 and $759.5 million over the first nine months.

G&A made up most of the $141.6 million quarterly loss and included $65.8 million of non-cash stock compensation and $21.5 million of financial advisory fees settled in stock. The year-earlier loss included $309.0 million of other expense. Net property, plant and equipment reached about $1.67 billion.

Debt, net, rose to $958.4 million after a $463.0 million net increase in borrowings under Fermi’s convertible notes and equipment-financing facilities. Cash and restricted cash fell to $315.5 million from $408.5 million of cash at the end of 2025.

The investor deck lists $1.2 billion of financing commitments, including a $500 million turbine warehouse facility with about $445 million drawn and $431 million of 5% convertible notes due in 2031.

Will the site clear its construction conditions?

Texas Tech University System, Fermi’s landlord, remains committed to the project, and the two continue working on land-lease conditions required before vertical construction. Chancellor Brandon Creighton said Texas Tech “remains firmly committed to the success of Project Matador.” Fermi also scheduled a call for 9 a.m. ET Thursday.

The next commercial test is whether Fermi and the hyperscaler convert the prepayment, construction agreement and proposed steel purchase into a definitive long-term lease before 2027. Until then, Fermi must turn a funded 600 MW reservation into operating capacity backed by a binding lease, without the 222 MW, $6.5 billion contract it held with TensorWave.