Fermi Q2 Earnings Call Highlights

Fermi (NASDAQ:FRMI) said it completed each of the five priorities outlined in its prior 90-day plan, including signing a binding customer agreement for up to 650 megawatts of capacity, strengthening its balance sheet and advancing construction and partnership efforts at its Project Matador campus.

Chairman Marius Haas said the company’s strategy is centered on supplying large-scale, reliable power to AI and data center customers amid grid-interconnection delays and equipment constraints. “Power is the binding constraint on AI compute,” Haas said, adding that Fermi was created to address the need for electricity that can be delivered on accelerated timelines.

TensorWave agreement anchors commercial progress

Chief Commercial Officer Anna Bofa said Fermi signed a binding agreement with TensorWave for up to 650 MW of capacity, contingent on all expansion options being exercised. The agreement is structured in three phases, beginning with a 15-year commitment for 222 MW of gross power through a turnkey data center solution.

Fermi said the initial phase represents approximately $6.5 billion of revenue over the initial term. The company is finalizing a backstop agreement supporting certain lease obligations and expects to identify the counterparty in coming days. Bofa said the anticipated investment-grade backstop would cover the full 15-year term.

Under the arrangement, Fermi plans to charge base rent and a fixed power charge, while passing variable energy costs through to the customer. CFO Rob Masson said the structure means the company does not intend to take commodity-price risk or hedge fuel costs.

Bofa described TensorWave as a strategic anchor customer because of its position in the AI infrastructure ecosystem and its potential links to semiconductor companies, hyperscalers, enterprises and AI companies. She said Fermi remains engaged with roughly a dozen prospective customers and strategic partners, including neocloud providers and hyperscalers, and expects to announce additional agreements in coming months.

Fermi expects construction and revenue commencement for TensorWave to begin in phases around the end of the third quarter or early in the fourth quarter of 2027. Once the initial portion is available, the customer would begin paying rent while the remaining build-out continues, Bofa said.

Power delivery plans and Hillcore alliance

Chief Operating Officer Jacobo Ortiz said Fermi targets 640 MW of nameplate capacity by the fourth quarter of 2027, including an initial 210 MW expected to be available on July 1, 2027.

Phase one is expected to include six Siemens SGT-800 turbines led by Primoris, three GE 6B units and seven TM2500 units led by Relevant Power Solutions, all operating in simple-cycle configuration, as well as 200 MW of utility power from Xcel.

The company also said three Siemens F-class turbines arrived at the Port of Houston in July and cleared customs. The units can provide up to 728 MW in simple-cycle mode, according to Ortiz, while TSK is handling fast-start engineering for the equipment.

Separately, Fermi entered a strategic alliance with Hillcore Energy Partners and its affiliates, including JV Driver, under a build, own, operate, transfer structure. The partnership is expected to bring approximately 2.6 gigawatts of additional power capacity to Project Matador, increasing total available power to 4.8 GW, the company said.

Under the arrangement, Hillcore will finance, build, own and operate its facility, while Fermi will serve as anchor offtaker only as tenant leases are signed. Fermi said it will retain income from base rent, with fuel costs passed through to tenants. The company also has an option to acquire the facility at fair market value after year 10.

Ortiz said first power from the Hillcore development is targeted within 24 months after a notice to proceed. Hillcore’s first phase could range from 360 MW to 720 MW during that period, he said.

Capital raise and project funding

Masson said Fermi completed an upsized offering of more than $430 million in 5% convertible senior notes due 2031, including the full exercise of the initial purchasers’ option for an additional $56 million. Net proceeds after the capped-call transaction were approximately $382 million.

The company said the financing was intended to improve its operational flexibility and negotiating position while limiting potential dilution. Masson said Fermi believes the capped-call structure protects shareholders from dilution until the stock price more than doubles.

Management did not disclose a total capital expenditure figure for the TensorWave project. However, Masson said market comparisons for power infrastructure generally range from $3 million to $4 million per MW of gross power capacity, while turnkey data center construction typically ranges from $10 million to $12 million per MW.

Fermi said it plans to match capital deployment with signed commercial agreements and use various funding sources as projects move into construction. Haas identified finalization of the backstop arrangement and project financing as the next key milestones before equipment can be moved to the site and construction can proceed.

Leadership transition and operating model

Haas said Lee McIntire was appointed CEO effective Tuesday. McIntire has served on Fermi’s board since September 2025 and previously led large-scale project delivery organizations at Bechtel, McDermott and TerraPower, according to Haas.

During the question-and-answer session, Haas said Fermi’s search with Heidrick for a long-term CEO would continue, adding that the company would not set a timetable for that decision.

Management said the TensorWave arrangement provides Fermi with experience delivering a full turnkey solution, including electrical and mechanical infrastructure, switchgear, battery energy storage, chilled-water systems and liquid cooling. However, Masson said Fermi expects to offer customers a range of models, from powered land and powered shells to turnkey facilities, depending on customer requirements.

Fermi also said its Xcel grid connection is outside ERCOT and that its behind-the-meter power strategy is not dependent on the Texas public grid. Management said the structure strengthens the company’s position as customers seek capacity that can be developed without relying on new grid-dependent demand.

About Fermi (NASDAQ:FRMI)

Fermi's mission is to power the artificial intelligence (“AI”) needs of tomorrow. We are an advanced energy and hyperscaler development company purpose-built for the AI era. Our mission is to deliver up to 11 gigawatts (“GW”) of low-carbon, HyperRedundant™, and on-demand power directly to the world's most compute-intensive businesses with 1.1 GW of power projected to be online by the end of 2026. We have entered into a long-term lease on a site large enough to simultaneously house the next three largest data center campuses by square footage currently in existence.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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