A Texas power developer lines up a $200 million prepayment from a cloud giant reported to be Amazon

Fermi, a Texas developer that wants to sell power to AI data centers but has no revenue yet, has landed a big customer. On Thursday it said an unnamed "investment-grade hyperscaler" agreed to develop an initial 600 megawatts at its Project Matador site near Amarillo, starting in 2027.

A hyperscaler is one of the giant cloud companies. The Financial Times then reported, citing people familiar with the matter, that this one is Amazon. Neither company has confirmed it.

Investors moved fast. Fermi's shares closed up about 26.7% on Friday at $2.61, their best day ever. Even so, the stock is down roughly 68% this year.

In our view, the deal matters beyond one small company. It suggests AI's biggest buyers will pay cash years ahead to lock up power. It also shows who sets the terms. The customer has agreed to put money down without signing a lease, and, according to the FT's sources, plans to build its own data centers.

What the customer is paying for

Fermi's November 12 release lists three pieces. The customer agreed to a $200 million prepayment and a $15 million early construction and site-preparation agreement. A third, $90 million agreement to buy steel and building materials Fermi had already secured is still being finalized.

There is no long-term lease yet. On the earnings call, chief commercial officer Anna Bofa said the sides were "very, very far along." She said Fermi requires 15- to 20-year terms in all its deals, with tenants covering most property costs.

The shape of the deal is narrower than Fermi's original pitch. The customer, which the FT identifies as Amazon, is expected to build its own data centers on the site, according to the FT's sources. That leaves Fermi mainly supplying land and electricity.

Lee McIntire, on his first call as chief executive, called it "a simpler deal providing power to a single customer." Bofa said the goal is to start work on site by December 1, and that the customer will get up to eight buildings as they become available. She put first power in late second quarter or early third quarter of 2027.

To make room, Fermi cancelled an August lease with TensorWave, a smaller AI cloud provider, plus a related credit-backing agreement with chipmaker AMD. McIntire described that lease as complex, with several parties and outside credit support. Chairman Marius Haas said he would choose a direct deal with a large hyperscaler "all day long."

A reported second try with Amazon

Investors have seen a version of this before. In December 2025, an unnamed prospective tenant ended an agreement to advance up to $150 million for construction, before any money was drawn. Fermi's shares fell about 34% the next day.

Business Insider reported at the time that the tenant was Amazon. Fermi and its then-chief executive, co-founder Toby Neugebauer, denied that report, according to Reuters. The FT reported that the talks foundered over price. Neugebauer left the chief executive job in April.

So the Amazon link rests, for now, on the FT's unnamed sources. Fermi says only that the customer's identity is confidential.

The risks still on the table

Fermi's finances are thin for a project of this size. At September 30 it held $315.5 million in cash, including restricted funds, against $958.4 million of debt. It lost $141.6 million in the third quarter, much of it in stock-based pay and advisory fees settled in shares.

Deadlines are close. The FT reported that Fermi's land lease with the Texas Tech University System requires a tenant agreement of at least 200 megawatts by December 31. In a statement McIntire read on the call, Texas Tech's chancellor said the system "remains firmly committed" to the project. Fermi also paid lenders about $25 million in fees to amend its MUFG turbine financing facility, removing a November 10 lease deadline.

Permits are another risk. McIntire said Texas paused new air permits before the election and that permits "are harder to come by." Fermi says it holds air permits covering 6 gigawatts, and Bofa said the site has all the permits required so far for customers to start building and take power.

The bull case rests on equipment that is hard to buy today. Fermi says it has secured more than 2 gigawatts of gas turbines that would power the site directly, bypassing the public grid. McIntire said the turbines and related equipment are probably worth close to $4 billion, by management's estimate. Pipeline operator Energy Transfer has committed gas supply.

Fermi says signing its current prospects would fill its 2.2 gigawatts of near-term capacity. It wants four or five large cloud tenants and says the site could eventually reach about 17 gigawatts, if customers sign binding deals.

For buyers and investors, our read is that the takeaway cuts both ways. Cloud giants will pay early for scarce, ready-to-use power. But they are dictating the structure, and in this case are expected to build the data centers themselves. That leaves developers like Fermi earning a landlord's and power supplier's return, not a data center operator's. The next test is simple: a signed lease before the reported year-end Texas Tech deadline.