Amazon returns to Fermi with $200m deal after prior collapse

Key points

• Fermi announced a 600-megawatt power agreement with an unnamed hyperscaler, identified by sources as Amazon, to begin next year.
• The deal includes a $200 million prepayment, a $15 million construction agreement, and a pending $90 million materials purchase.
• Fermi confirmed the termination of its August 2026 lease with TensorWave, which was backed by AMD and valued at $6.5 billion.
• Fermi reported a third-quarter net loss of $141.6 million, with cash reserves of $286.3 million against $958.4 million in debt.
• Shares rose 24% on the news, though they remain down roughly 90% from their November 2025 peak.

Background

Fermi was founded in early 2025 by Rick Perry and Toby Neugebauer, aiming to build a massive data center campus near Amarillo, Texas. The company went public in October 2025 with a valuation exceeding $19 billion. However, it faced significant turmoil after Amazon withdrew from a $150 million deal in December 2025, causing shares to plummet. Neugebauer was ousted in April 2026 following allegations of damaging customer relations, leading to a boardroom battle. Perry failed to secure enough votes for board reelection last month, while Neugebauer continues to push for the company to be sold.

How outlets are covering it

The Financial Times and Barron's highlight the Amazon deal as a critical lifeline for Fermi, emphasizing the $200 million prepayment as a sign of renewed confidence. Yahoo Finance, citing Fermi’s official release, frames the agreement as a strategic move to secure power access before finalizing a long-term lease. Data Center Dynamics focuses on the simultaneous collapse of the TensorWave deal, noting that Fermi remains without a definitive tenant. While all sources agree on the financial terms, they differ in emphasis: some view the Amazon deal as a recovery, while others stress the ongoing financial pressure and the risk of the TensorWave termination.

Why it matters

The deal underscores the intense competition for power infrastructure in the AI sector. Fermi’s ability to secure Amazon despite prior setbacks highlights the value of pre-permitted sites. However, the collapse of the TensorWave deal and Fermi’s significant debt and losses raise questions about the sustainability of such large-scale, pre-revenue data center projects. The situation also reflects broader trends in the AI infrastructure market, where power availability and financial stability are critical factors.

What to watch

Fermi must finalize the long-term lease with Amazon and the $90 million materials agreement. The company also needs to secure financing and meet conditions of its 99-year land lease with Texas Tech University by December 31. Neugebauer continues to push for the sale of the company, while Fermi aims to convert its pipeline of prospective customers into leases to fill its 2.2 gigawatt capacity.