Key Takeaways
- Fermi shares jumped 16% today after AMD signed a credit support agreement for the lease on the 222 MW first phase of Fermi’s Project Matador campus in Texas.
- AMD’s backing supplies the guaranty that Fermi’s $6.5 billion TensorWave lease was waiting on, so the first phase should be much easier to finance.
- Analysts expect Fermi’s revenue to grow from $40 million in fiscal 2026 to $2.37 billion in fiscal 2028, and that depends on phase one getting built.
- The lease still has to close by Oct. 31, and Fermi still has to raise project financing. Third-quarter results are due Nov. 12.
Fermi (FRMI) shares jumped 16% this morning. Before the open, the company said AMD (AMD) has signed a credit support agreement for the lease on phase one of Project Matador, its AI and power campus in Texas.
It’s a welcome change for a stock that had lost 89% over the past year.
AMD fills the gap
Here’s the backstory. In August, Fermi signed its first binding customer lease: 222 MW for AI cloud provider TensorWave, worth about $6.5 billion over an initial 15-year term. The site is built to run tens of thousands of AMD’s Instinct GPUs. (Spread evenly, that’s roughly $430 million a year.)
But closing depended on a guaranty for some of TensorWave’s obligations. On Sept. 22, the two pushed the closing date back to Oct. 31. Fermi CEO Lee McIntire said then: “Our remaining work is to finalize the lease guaranty with our counterparty.”
Today we learned that the counterparty is AMD. Mathew Hein, AMD’s senior vice president and chief strategy officer of corporate development, called the deal “an important step in expanding the infrastructure capacity needed to bring next-generation AI solutions to market.”
The two companies also agreed on a framework for phases two and three, up to 650 MW in all. That expansion still needs binding leases behind it.
A blue-chip backstop for lenders
This matters because Fermi has almost no revenue yet. Analysts expect just $40 million in fiscal 2026, rising as Matador’s first phase comes online.
The lease was already public, so today’s news shouldn’t move those estimates much. But it makes them more likely to come true, since they rest on phase one getting built.
And building it costs far more than Fermi’s operations bring in.
Fermi has already put more than $1.5 billion into Project Matador, and finishing phase one will take project financing. Fermi calls the AMD agreement a key milestone toward getting that financing. Lenders want to know the rent will get paid, and now AMD’s credit stands behind it.
Oct. 31 is the date to watch
I think this is Fermi’s most important step since it signed the lease, because it gives lenders a tenant they can underwrite.
Of course, it isn’t done yet. Fermi’s own list of risks includes the conditions on AMD’s obligations, the lease closing and raising project financing on acceptable terms. The lease has to close by Oct. 31, and third-quarter results on Nov. 12 should show how far the financing has come.
So what is Fermi stock actually worth?
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