Data centre REIT Fermi tumbles 40% after potential customer backs out of funding deal

Michael Gallucci works on the floor at the New York Stock Exchange in New York, Wednesday, Dec. 10, 2025. (AP Photo/Seth Wenig) (Seth Wenig)

Shares of Fermi plunged 34 per cent on Friday after the data center real estate investment company said a prospective tenant had terminated a deal to help fund construction at its Texas site, dealing a setback to the newly listed firm.

Under the terms of the agreement, the undisclosed customer would have leased part of Fermi’s Project Matador site in Texas and could provide up to US$150 million to help finance construction.

While both sides remain in discussions over a potential lease, the funding agreement has been scrapped.

The move could mark an early challenge to Fermi, a company co-founded by former U.S. Energy Secretary Rick Perry, which started trading in October at a valuation of $14.8 billion but is yet to bring in revenue.

“With a lot of smaller and newer firms, there tends to be key person and key client risk. Losing one client hurts more when you have fewer clients to start with,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Fermi rode strong AI-driven demand to a robust IPO in October as investors piled into companies providing the infrastructure necessary for the technology.

But the latest setback for the company, which is less than a year old, comes at a time when it is navigating a more cautious backdrop for AI as some investors question how long the sector’s rally can continue without clearer profit paths.

“As a relatively new public company, Fermi is still in that ‘show me’ stage,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

“When a (potential) tenant cancels a $150 million deal on a company that is yet to show profits, investor concern skyrockets, especially amid current concerns about an overbuild of data centers.”

The stock was last trading at $10.04, nearly half its initial public offering price of $21, and was the third biggest loser on the Nasdaq on Friday.

(Reporting by Niket Nishant in Bengaluru; Editing by Anil D’Silva)