Fermi Inc. Annual Report: A Look at the Year

Think of Fermi not as a typical tech company, but as a heavy-duty infrastructure builder. They are laying the physical foundation—power plants and water resources—that AI data centers need to function.

1. The Business Model

Fermi is developing a massive, private "power campus" in the Texas Panhandle called Project Matador. They own over 7,500 acres and are building a private utility system, including their own power plants, substations, and water cooling systems.

They act as a specialized landlord. Their plan is to lease space to large-scale tech companies and charge them for guaranteed power. They have secured permits and equipment to generate up to 2 gigawatts of power by the end of 2027, with long-term expansion plans to reach 17 gigawatts. They have also secured water rights for 15,000 acre-feet per year, a critical resource for cooling modern GPU clusters.

2. Financial Position

Fermi is currently in the setup phase and has not yet generated revenue. As of December 31, 2023, the company reported a loss of $84.2 million, driven by $52 million in turbine equipment purchases and $18 million in general operating costs. The company is currently burning through approximately $6.5 million in cash per month.

Their business model relies on securing long-term tenants. They estimate a 14–16% return on the first phase of the project, contingent on signing a 15-year lease with a major tech partner.

3. Operational Progress

Fermi is transitioning from land preparation to hardware installation. They have purchased $410 million worth of turbines from GE and Siemens, with $285 million of that balance still outstanding.

Key Milestones:

• First Power: 86 megawatts are expected to be ready by late 2026, with an additional 114 megawatts by mid-2027.
• 2027 Capacity Goal: The company aims for 2 gigawatts of total capacity online by December 31, 2027.
• Nuclear Development: The company is pursuing permits for four Westinghouse AP1000 nuclear reactors. This is a long-term $12 billion project, currently incurring $4.5 million in annual site study costs.

4. Risk Factors

• Revenue Status: The company has no signed contracts. With $112 million in cash on hand, they have an estimated runway of approximately 17 months.
• Supply Chain: The 2026 power goals were adjusted due to a shortage of high-voltage transformers. The company is currently aligning its construction schedule with tenant demand to manage capital efficiency.
• Execution: As a capital-intensive infrastructure project, Fermi faces significant regulatory and operational hurdles. The company’s success depends entirely on its ability to secure major power contracts to offset its debt and ongoing construction costs.

5. Investor Takeaway

Fermi is a high-risk, long-term play on the infrastructure demands of the AI industry. They possess the land and the equipment, but they are currently a construction site waiting for a tenant. For those considering an investment, the most important signal to watch is the signing of a major power contract by late 2025. Until a customer is secured and rent collection begins, the company remains in a pre-revenue, capital-intensive development stage.