S-11: Fermi Inc. Files S-11 for AI-Focused Energy Campus IPO

Fermi Inc., an advanced energy and hyperscaler development company, filed an S-11 registration statement for its initial public offering, detailing plans for a multi-gigawatt AI data center campus in Texas.

Summary

• Fermi Inc. is developing Project Matador, a 5,263-acre Advanced Energy and Intelligence Campus in Amarillo, Texas, aiming to deliver up to 11 GW of power and 15 million square feet of AI-ready compute infrastructure by 2038.
• The project will feature a 'HyperRedundant' energy mix including 4.5 GW of natural gas-fired generation (580 MW secured), 6.0 GW of nuclear capacity (4 Westinghouse Reactors and 2.0 GW SMRs, COL application accepted), up to 1.75 GW of solar PV, and 1 MW x 4 hour battery energy storage systems per 3 MW of IT load.
• Fermi expects to have 1 GW of power online by the end of 2026, with Phase 1 data center operations launching in April 2026 and completing by December 2026.
• The company has secured a 99-year Ground Lease Agreement with the Texas Tech University System for the Project Matador site.
• Fermi intends to elect and maintain its status as a Real Estate Investment Trust (REIT) for U.S. federal income tax purposes, commencing with the short taxable year ending December 31, 2025.
• The company has incurred a net loss of $6.37 million from inception (January 10, 2025) through June 30, 2025, with total assets of $89.17 million and net debt of $85.75 million as of June 30, 2025.
• Phase 0 and Phase 1 development are estimated to require over $2 billion in capital expenditures, with total capital needs for all phases projected between $70 billion and $90 billion.
• Fermi has raised $101.9 million in Preferred Units financing and $246.6 million through convertible debt, which converted to Class A Units.

Sentiment

Score: 6

Explanation: The company presents an ambitious and well-articulated plan to address a significant market opportunity in AI infrastructure and energy. The experienced management team, strategic site, and diversified energy approach are strong positives. However, the early stage of development, substantial capital requirements, inherent risks in nuclear projects, and lack of binding tenant contracts introduce considerable uncertainty and execution risk, leading to a neutral-to-slightly positive sentiment.

Positives

• Project Matador's 'HyperRedundant' site offers a unique combination of natural gas, water, fiber, and nuclear potential, strategically located adjacent to one of the largest natural gas fields in the U.S.
• The company has secured 580 MW of natural gas generation equipment for near-term delivery, aiming for 1 GW of operational power by end of 2026, providing a critical differentiator for tenants needing rapid access to large-scale energy.
• Proximity to the U.S. Department of Energy's Pantex Plant offers access to a highly experienced nuclear workforce (4,600 skilled professionals) and enhanced site security, attractive to prospective federal government contractors.
• Fermi has filed a Combined License Application (COL Application) for 4 GW of nuclear power (Westinghouse Reactors) with the NRC, which has been accepted for processing, positioning the project for accelerated nuclear development.
• The management team possesses deep expertise across energy infrastructure, large-scale project development, and operational execution, including co-founders Rick Perry and Toby Neugebauer, and Chief Nuclear Construction Officer Mesut Uzman.
• The REIT structure is expected to provide enduring tax advantages, allowing greater cash flow retention for reinvestment and tax-efficient exposure to AI infrastructure growth for investors.
• The company is actively negotiating letters of intent with leading AI infrastructure companies, expecting attractive terms including substantial prepayments and capacity-based rents.
• Fermi is developing an AI-powered project management office, MATRIX, to streamline execution of complex capital programs, aiming to reduce time, cost, and risk.

Negatives

• Fermi is a development-stage company with no operating history or historical revenue, facing significant execution risk across all major components of its business.
• The company has not yet constructed its facilities or entered into any binding contracts with tenants, and there is no guarantee of future success in securing tenants or completing construction on time.
• Significant additional capital (estimated $70-90 billion for full buildout) will be required, and there is no assurance such financing will be secured on acceptable terms or at all.
• The business model is highly dependent on third-party manufacturing and supply chain relationships, which are subject to risks like capacity constraints, increased costs, and delays (e.g., gas turbines, nuclear components, uranium).
• Technological advances in AI and compute infrastructure may outpace Fermi's development cycle, leading to technology obsolescence or misaligned infrastructure.
• The nuclear energy development is subject to extensive and uncertain regulation, lengthy timelines, and potential cost overruns, with the first unit not expected online until 2032.
• The proximity to the Pantex Plant, while offering talent, also introduces potential federal scrutiny, national security protocols, and risks of accidental catastrophic incidents.
• The company has identified a material weakness in its internal control over financial reporting due to a lack of formalized processes, inadequate segregation of duties, and insufficient qualified personnel.

Risks

• Business model is highly dependent on the successful construction, development, leasing, and maintenance of Project Matador.
• Ability to access adequate project financing, commercial borrowings, and debt/equity capital markets to fund significant anticipated capital expenditures.
• Ability to construct, operate, and maintain power generation facilities on schedule and at anticipated costs, potentially impacted by supply chain disruptions, labor availability, and raw material costs.
• The market for generating nuclear power is not yet established and may not achieve expected growth or may grow more slowly.
• Environmental history, remediation, and associated risks at the Project Matador Site.
• Ability to obtain and renew leases with tenants on favorable terms and manage growth.
• Exposure to price fluctuations and rapidly changing technology, including AI advancements that may outpace development.
• Impact of tariffs and global trade disruptions on the company and its tenants.
• Changes in political conditions, geopolitical turmoil, political instability, civil disturbances, and restrictive governmental actions.
• Public perception of nuclear energy can affect customers and the company.
• Failure to generate sufficient cash flows to service indebtedness.
• Material negative changes in the creditworthiness and ability of tenants to meet contractual obligations.
• Increases and volatility in interest rates.
• Increased power, labor, equipment procurement, shipping, refurbishment, or construction costs.
• Labor shortages or inability to attract and retain talent.
• Changes in, or failure to comply with, government regulation, including environmental footprint and electric generation/storage assets.
• Failure of information technology systems, cybersecurity attacks, or breaches of information security systems.
• Inability to obtain and/or maintain necessary government or other required consents or permits.
• Failure to qualify as a REIT and maintain REIT qualification for U.S. federal income tax purposes.
• Changes in, or failure to comply with, local, state, federal, and international laws and regulations, including taxation, real estate, and zoning laws, and increases in real property tax rates.
• Impact of any financial, accounting, legal, or regulatory issues or litigation.
• Reliance on third-party manufacturing and supply chain relationships, leading to increased costs, delays, and loss of revenue.
• Technological advances or disruptive innovations, specifically in AI, may outpace the development cycle, leading to technology obsolescence.
• Failure to achieve tenant adoption at the pace or pricing levels required for financial viability.
• Dependence on third-party vendors, contractors, and consultants.
• Terrorist attacks, cyberattacks, and threats compromising hybrid grid systems.
• Use of AI technologies (e.g., MATRIX) may cause inadvertent impacts and introduce new operational, legal, and regulatory risks.
• Project Matador's unprecedented scale presents significant planning, execution, and coordination risks.
• Ability to develop and retain site control depends on maintaining the leasehold interest with the Texas Tech University System.
• Extensive permitting, interconnection, and third-party coordination required for Project Matador's infrastructure.
• High demand for, constraints on supply of, and increasing costs for industrial scale gas-fired turbines.
• Westinghouse Reactors and SMRs can be costly and time-consuming to construct and commercialize, with risks of delays and cost overruns.
• Credit risks from customers failing to pay bills or counterparties breaching obligations.
• Physical site risks, including severe weather events, environmental conditions, or other disasters.
• Proximity of Project Matador Site to the Pantex Plant introduces potential federal scrutiny and risks of catastrophic incidents.
• Dependence on early infrastructure milestones to unlock downstream development phases.
• Construction risk amplified by the multi-vertical, high-voltage, high-capacity nature of the Project Matador Site.
• Inability to obtain sufficient water resources for operations.
• Connecting Project Matador with Tier 1 data center markets requires amplification and introduces risks associated with long-distance fiber connections.
• Costs to comply with federal, state, and local environmental laws and regulations may be material.
• Nuclear project execution depends on specialized vendors, whose failure or delay could materially impact the business.
• Risks associated with interconnecting and operating behind-the-meter energy infrastructure at scale, including regulatory challenges with SPS, SPP, and FERC.
• Execution risks with natural gas, solar, and BESS power sources, including fuel pricing volatility and equipment procurement.
• Failure to meet requirements for energy-related federal incentives (e.g., 45J, 45Q, 45V, 48C).
• Opposition from environmental groups, litigation, or reputational campaigns.
• Tenant consolidation or vertical integration could reduce long-term leasing demand.
• Requirement to offer lease concessions or capital subsidies to secure long-term tenants.
• Subtenant improvements impact leaseback model and base rent escalations.
• Qualification as a REIT involves a highly technical and evolving set of requirements, with potential for non-qualifying income.
• Legislative or other actions affecting REITs could have a negative effect.
• Requirement to establish and manage one or more Taxable REIT Subsidiaries (TRSs), which carry their own risks.
• Inability to predict when regular dividends will be paid due to significant capital investment requirements.
• REIT status requires compliance with limitations on attractive investment or business opportunities, hedging liabilities, and services to tenants.
• Dividends on Common Stock generally do not qualify for reduced tax rates available for some dividends.
• Board of directors' revocation of REIT status without shareholder approval may decrease total return.
• Charter limits share ownership, which may discourage takeovers.
• Reliance on a highly concentrated leadership team and potential succession or key personnel risks.
• Some management team members have limited experience operating a public company.
• Operating model includes multiple legal entities with interlocking governance structures, creating oversight challenges.
• Contractual arrangements with the Texas Tech University System may create alignment or interpretation risks.
• Related-party transactions could pose conflicts of interest or governance scrutiny.
• Litigation against CEO Toby Neugebauer could cause negative publicity or divert management attention.
• Adverse macroeconomic conditions could impair ability to raise capital or complete development phases.
• Cost overruns and inflationary pressures could materially increase development and operating costs.
• Changes in U.S. trade policy, including tariffs, may impact business and results.
• Interest rate fluctuations may increase cost of capital and reduce profitability.
• Shifts in federal, state, or local policy may affect permitting, taxation, or infrastructure incentives.
• Sustainability expectations may evolve in ways that affect project costs or tenant commitments.
• Global supply chain disruptions may delay delivery of critical infrastructure components.
• Stock price may change significantly following this offering, with no guarantee of resale at or above IPO price.
• Obligation to develop and maintain proper and effective internal controls over financial reporting (Section 404 Sarbanes-Oxley Act).
• Material weakness identified in internal control over financial reporting.
• JOBS Act allows postponement of compliance with certain laws and regulations, potentially making Common Stock less attractive.
• Historical and pro forma financial information may make it difficult to accurately predict future costs.
• Requirements of being a public company may strain resources and distract management.
• Texas Business Organizations Code (TBOC) case law is less developed than Delaware or Maryland, leading to less certainty.
• TBOC provisions provide additional protections for officers/directors while making it more difficult for shareholders to make proposals or bring derivative claims.
• Certain provisions of Texas law and antitakeover provisions in organizational documents could delay or prevent a change of control.
• Charter designates the Business Court in the First Business Court Division of the State of Texas as the exclusive forum for certain litigation, potentially limiting shareholder's ability to obtain a favorable judicial forum.
• Charter limits personal liability of directors and officers for breaches of fiduciary duties under Texas law.
• If shares are purchased in this offering, immediate and substantial dilution of investment will occur.
• An active, liquid trading market for Common Stock may not develop.
• Significant portion of total outstanding shares are restricted from immediate resale but may be sold in the near future, causing price drops.
• If securities or industry analysts do not publish research or publish unfavorable reports, stock price and trading volume could decline.
• Future issuance of preferred stock could make it difficult for another company to acquire Fermi or adversely affect common stockholders.
• Broad discretion to use IPO proceeds, which may not yield a favorable return.
• Potential for securities class action litigation.

Future Outlook

Fermi Inc. aims to become a premier platform for AI tenants by delivering up to 11 GW of low-carbon, HyperRedundant, and on-demand power to on-site compute centers by 2038. The company projects 1 GW of power to be online by the end of 2026, with Phase 1 data center operations commencing in April 2026. Future growth involves scaling generation capacity annually, establishing a first-mover advantage in nuclear power development, expanding strategic partnerships with AI and HPC players, and enhancing vertical integration across the infrastructure value chain. The company anticipates continued rapid growth in AI-specific data center demand, which it plans to address through its integrated energy platform and REIT structure.

Management Comments

• Fermi's mission is to power the artificial intelligence (AI) needs of tomorrow.
• We believe that Fermi has a unique combination of important advantages that will help propel America's AI economy forward.
• Our HyperRedundant site is strategically located adjacent to one of the largest known natural gas fields in the United States, within a high-radiance solar corridor, and well-positioned for advanced nuclear development.
• We believe this rapid power delivery timeline is a critical differentiator that will allow Fermi to attract tenants that require near-term access to large-scale, reliable energy to power their AI data center compute needs.
• Our proximity to the Pantex Plant offers us the opportunity to access a highly experienced workforce steeped in nuclear safety culture and expertise.
• Project Matador represents unmatched, sector-defining potential to deliver up to 11 GW of power to on-site compute centers by 2038 through a redundant and flexible mix of natural gas, nuclear and solar energy power.
• We believe our efficient, scaled and environmentally responsible behind-the-meter energy model that is supplemented by grid connections for additional redundancy avoids the most significant bottlenecks facing many other currently planned AI data center projects.
• We strive to think nimbly, act decisively and operate purposefully with an integrated perspective of developing a high quality, long lifecycle, and reliable portfolio of diverse and integrated power generation assets.
• We believe that we will be able to provide our data center and hyperscaler tenants the quality of power, agility of growth optionality and security of pricing that exceeds any other behind-the-meter powered land option nation-wide and equals the quality and reliability of any utility or grid offering.
• We believe Fermi's strategy to secure long lead-time items puts us in a leading position in the nation's expected nuclear power renaissance.
• We believe our leadership team has key attributes that could materially assist the United States in achieving each of these strategic goals (winning the international AI development race and prioritizing nuclear deployment).
• We believe that our REIT structure will allow us to retain greater cash flows to reinvest in the business and distribute to shareholders.

Industry Context

Fermi Inc. is positioning itself at the nexus of two rapidly expanding and converging industries: artificial intelligence and energy infrastructure. The filing highlights the acute power shortage and grid constraints as the primary bottleneck for AI infrastructure expansion, with data centers expected to account for almost half of U.S. electricity demand growth by 2030. Fermi's vertically integrated, 'behind-the-meter' energy model directly addresses this constraint, offering grid-independent, scalable, and reliable power solutions. This approach differentiates Fermi from traditional data center developers reliant on public grids and positions it to capitalize on the 'gravitational pull' of hyperscalers prioritizing power access and speed-to-market over traditional Tier 1 data center locations. The company also aligns with broader U.S. strategic priorities for nuclear deployment and winning the AI development race, leveraging federal support and tax incentives.

Comparison to Industry Standards

• Fermi's behind-the-meter energy model is designed to avoid significant impediments faced by other planned AI data center projects that largely rely on public grids for power, offering a critical differentiator in speed-to-market and reliability.
• The company's target of approximately five years for the construction of each nuclear unit is stated to be in line with previous completed projects in China and the UAE, and significantly lower than the prolonged project deadlines experienced by past nuclear projects in the United States, such as Southern Company's Vogtle plant (approximately fifteen years).
• Fermi's owner-directed EPC model for nuclear construction aims to reduce stacked margins and maintain transparency and control, contrasting with turnkey EPC or cost-plus models that have led to substantial cost overruns in past U.S. nuclear projects.
• The planned integrated mix of natural gas, nuclear, and solar energy, supplemented by grid connections, is intended to provide reliability and cost predictability that exceeds non-diversified behind-the-meter options and equals the quality of utility or grid offerings.
• Project Matador's power density targets of 50-100 kW per rack (and up to 240 kW per rack in some cases) for next-generation AI deployments significantly exceed traditional data center densities of 3-10 kW per rack, aligning with the evolving demands of generative AI workloads.
• The company's strategy to secure long lead-time nuclear equipment and file a COL Application positions it for a 'first-mover advantage' in the U.S. nuclear power renaissance, capitalizing on renewed administrative focus on accelerating nuclear infrastructure buildout.

Management Changes

Corporate Governance

Legal Proceedings

• No current material legal proceedings are pending against Fermi Inc. that would have a material adverse effect on its business, financial condition, results of operations, or cash flows.
• Active engagement is anticipated in the NRC's ongoing review of the COL Application submitted in June 2025, which may involve technical audits, requests for additional information, and public hearings.
• No litigation or opposition from environmental groups, public interest organizations, or state/local entities related to Project Matador development is currently known.
• CEO Toby Neugebauer is involved in ongoing legal proceedings (Animo/GloriFi Proceedings) related to previous entrepreneurial endeavors, which may attract negative publicity and divert his attention. The outcome and impact on Fermi are unpredictable.
• Further state-level infrastructure reviews associated with water withdrawal permits and site air quality registration are anticipated.
• Further assessment and remediation of historical environmental conditions are anticipated.

Related Party Transactions

• Several executive officers, directors, and their affiliates (including Toby Neugebauer, Jacobo Ortiz Blanes, and MAD Energy) held Seed Convertible Notes and Series A Convertible Notes, totaling $246.6 million, which converted into Class A Units upon the Preferred Units Financing.
• TCF Utilities Management LP (TCFU), where Chief Power Officer Larry Kellerman is CEO, has a Services Agreement with Fermi, receiving $35,000 per month plus expenses for consulting services.
• Toby Neugebauer received an immediately vested award of 1,500,000 Class A Units (TMNN Class A Units) on August 2, 2025, through an affiliate, TMNN Manager LLC.
• Mesut Uzman and Sezin Uzman received 250,000 restricted Class A Units each (Uzman Restricted Class A Units) on August 2, 2025, subject to time-based and performance-based vesting.
• Miles Everson, Jacobo Ortiz, and Charlie Hamilton received 2,100,000 restricted equity units for Class A Units each (Senior Management Restricted Class A Units) on August 2, 2025, with vesting tied to IPO completion, tenant agreements, and power delivery.
• John Donovan received 1,000,000 restricted equity units for Class B Units (Management Restricted Class B Units) on August 2, 2025, with time-based and performance-based vesting.
• Toby Neugebauer received a compensatory anti-dilution grant of 2,500,000 restricted equity units for Class A Units (Neugebauer Compensatory Anti-Dilution Grant) on August 2, 2025, vesting fully on January 1, 2028.
• The company has reserved 500,000 Class B Units as an equity pool for non-executive employees and service providers, administered by Miles Everson.
• Macquarie, an affiliate of an underwriter, is the lender under the $100 million Macquarie Term Loan and purchased 25,000 Preferred Units in the Preferred Units Financing.
• The Director Nomination Agreement grants certain members of the Investor Group (including entities controlled by Griffin Perry, Toby Neugebauer, and Mr. Neugebauer's wife) the right to designate one nominee to the board of directors.

Stakeholder Impact

• **Shareholders**: Potential for long-term capital appreciation through exposure to AI infrastructure growth and energy development in a tax-efficient REIT structure. However, significant dilution from the IPO and future capital raises, high investment risk due to development stage, and potential for stock price volatility are noted. Dividends are not expected in the near term.
• **Employees**: Opportunities for highly skilled professionals, particularly in nuclear and energy sectors, leveraging proximity to the Pantex Plant and local college campuses. Equity compensation plans (2025 Long-Term Incentive Plan) are in place to attract and retain talent. However, labor shortages and competition for skilled workers are risks.
• **Customers (Hyperscalers/AI Operators)**: Access to scalable, reliable, low-carbon, and cost-effective 'behind-the-meter' power, addressing a critical constraint in AI infrastructure expansion. Customizable power mixes and high uptime targets (99.999% and above) are offered. However, delays in project completion or failure to meet operational covenants could lead to penalties or lease terminations.
• **Suppliers/Contractors**: Significant opportunities for vendors in nuclear, natural gas, solar, and data center construction and equipment supply. However, reliance on a limited number of specialized vendors and potential supply chain disruptions pose risks to project timelines and costs.
• **Local Communities (Amarillo, Texas)**: Potential for economic development, job creation, and collaboration with Texas Tech University System for academic, research, and workforce training programs. However, environmental concerns, water usage, and potential public opposition to large-scale energy projects, especially nuclear, could arise.
• **Regulatory Bodies (SEC, NRC, FERC, PUCT, TCEQ)**: The company is subject to extensive and evolving regulatory oversight, requiring compliance with licensing, environmental, and financial reporting standards. Any non-compliance or changes in regulatory policy could lead to fines, delays, or operational restrictions.
• **Creditors**: Debt financing is a key component of the capital strategy, with project-level debt secured by revenue-generating infrastructure. However, the company's development stage and lack of revenue in the near term present credit risks, and certain debt agreements include mandatory prepayment triggers and redemption rights for lenders.

Next Steps

• Fermi LLC will convert into Fermi Inc., a Texas corporation, prior to the effectiveness of the registration statement.
• The company will complete Phase 0 (site preparation and critical external infrastructure) by year-end 2025.
• Phase 1 development, including one million square feet of data center capacity and 1 GW of power, is targeted to commence operations in April 2026 and complete by December 2026.
• Fermi will finalize contracts contemplated by the non-binding MOU with Energy Transfer for natural gas supply.
• Negotiations with Southwestern Public Service Company (SPS) for up to 200 MW of grid power are ongoing.
• Fermi intends to negotiate the lease or rental of up to an additional 100 MW of TM2500s from Mobile Power Solutions (MPS).
• The company will continue to work on securing long lead-time nuclear equipment and advance the NRC's review process for its COL Application.
• Front-end engineering design (FEED) studies for the nuclear-based hybrid energy project (Hyundai MOU) are expected to be completed within six months following a FEED agreement.
• Early procurement activities and comprehensive partner onboarding for the nuclear project (Hyundai MOU) are targeted to initiate by mid-2026.
• EPC activities for the nuclear project (Hyundai MOU) are targeted to start by Q3 2026.
• Fermi will form additional Special Purpose Entities (SPEs) over time to own and finance specific operating assets as Project Matador development advances.
• The company will continue to pursue tenant acquisition and secure binding lease agreements with hyperscaler tenants.
• The company will establish an audit committee, a nominating and corporate governance committee, and a compensation committee prior to the completion of this offering.
• The company will adopt a customary code of ethics and business conduct and a compensation recoupment (clawback) policy.
• The company will file a registration statement on Form S-8 under the Securities Act to register stock issuable under its equity compensation plans.

Key Dates

Recommendation

Fermi Inc. presents a compelling, albeit high-risk, investment opportunity in the rapidly growing AI infrastructure and energy sectors. The company's strategic vision, experienced management, and unique Project Matador site with diversified energy sources (natural gas, nuclear, solar, battery storage) are significant strengths. The REIT structure offers tax advantages and aligns with long-term growth. However, the company is in a very early development stage with no current revenue, requiring substantial future capital (estimated $70-90 billion for full buildout). There are considerable execution risks, including securing binding tenant contracts, navigating complex regulatory approvals (especially for nuclear), managing supply chain disruptions, and mitigating technology obsolescence. The identified material weakness in internal controls and ongoing litigation involving the CEO add further uncertainty. Given the high potential but equally high risks and the long-term nature of the project, a 'hold' recommendation is appropriate for investors who understand and are comfortable with significant development-stage risk, while closely monitoring progress on key milestones, tenant acquisition, and financial performance.

Keywords

AI Infrastructure, Data Center, Nuclear Power, Natural Gas Power, Renewable Energy, REIT, Project Matador, Texas Tech University System, SEC Filing, IPO, Energy Storage, Hyperscaler, Corporate Conversion, Risk Factors, Capital Expenditure, Environmental Regulation, Corporate Governance, Texas