On August 13, Fermi Inc. (NASDAQ:FRMI) held its second-quarter earnings call and delivered exactly the kind of update a young power developer needs: proof that its plans are turning into contracts. Chairman Marius Haas told investors the company had hit all five commitments from a 90-day plan he laid out three months earlier, topped by a binding customer agreement with AI infrastructure company TensorWave. For a business that still has no meaningful revenue and years of construction ahead of it, a signed customer paired with visible progress on the ground is exactly what shareholders wanted to see.
Bull Case: Power, Money and Momentum
The headline item is the TensorWave agreement itself: up to 650 megawatts of power if every expansion option is exercised, split across three phases. The initial phase is a 15-year commitment for 222 megawatts of gross power delivered through a turnkey data center solution, worth about $6.5 billion in revenue over that term. Chief Commercial Officer Anna Bofa described the deal as more than one customer’s order, noting that the $6.5 billion figure is tied strictly to this Phase 1 commitment, while the campus holds a total expansion potential of up to 650 megawatts. This positions TensorWave as a gateway to hyperscalers and chipmakers that could add more workloads to the campus later on.
Fermi backed the contract with hardware. Three Siemens Energy F-class units, each rated above 242 megawatts, reached the Port of Houston in July and cleared customs to advance the company’s 2028 and 2029 power delivery objectives, while a separate configuration of simple cycle turbines and utility power feeds the plan to deliver 640 megawatts of nameplate capacity by the fourth quarter of 2027, with the first 210 megawatts online by July 1, 2027. A new alliance with Hillcore Energy Partners adds another 2.6 gigawatts within three years, with Hillcore financing and building that facility while Fermi simply collects rent, doubling the campus’s planned output to 4.8 gigawatts at no extra capital cost to Fermi. The quarter also brought a stronger balance sheet, via an upsized offering of more than $430 million in convertible senior notes, yielding approximately $382 million in net proceeds after a capped call, and a new chief executive in Lee McIntire, whose résumé includes running major projects at Bechtel, McDermott, and TerraPower.
Bear Case: Big Numbers, Bigger Unknowns
Some of the biggest figures on the call still come with asterisks. The backstop agreement sitting behind the TensorWave lease wasn’t finished as of the call, and Fermi hasn’t named the counterparty standing behind it, only that a deal was expected within days. Management also said the broader campus can’t break ground until project financing beyond this round is lined up, a reminder that the recent convertible note raise alone doesn’t cover building out a multi-billion dollar site. The $6.5 billion figure is tied strictly to the initial Phase 1 commitment (222 megawatts), whereas the full 650-megawatt potential depends on future expansion options being exercised.
TensorWave is also, for now, Fermi’s only signed customer. Executives said about a dozen prospective customers and partners were in active talks, but a single anchor contract means much of the near-term story rests on one counterparty. That concentration sits alongside a leadership picture Haas himself described as unsettled heading into the quarter, pointing to “internal transitions” and self-imposed deadlines the new team had to prove it could hit. And revenue from the TensorWave deal won’t start flowing until power actually reaches the site, meaning Fermi is still a long way from turning contracted megawatts into cash.
What the Smart Money Sees
51 hedge funds held Fermi shares in the most recent quarter, up from 40 the quarter before, which points to institutional conviction building rather than fading. Short interest stands at 9.70% of the float, a level that shows real, organized skepticism rather than routine hedging. Rising fund ownership alongside a meaningfully sized short position means both camps are leaning in at the same time. Neither side has blinked yet, and the TensorWave contract announced this quarter is likely the next data point each will use to make its case.
The Next Test Is Delivery
Fermi’s second quarter answered the question that mattered most: could the new leadership team turn a permitted site and a stack of turbines into an actual paying customer? It did, and the TensorWave agreement, the Hillcore alliance, and the equipment now sitting at the Port of Houston all point in the same direction. But a pending backstop agreement, construction financing still to be arranged, and a revenue plan that leans on one counterparty exercising its options leave real distance between signed paper and cash in the door. What happens between now and the first power delivery targeted for July 2027 will decide whether this quarter marked a turning point or just a promising start.
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