(Bloomberg) — Fermi Inc. shares rose 55% in their debut after the energy real estate investment trust raised $682.5 million in its US listing, the latest sign of investors’ hunger for exposure to a boom in artificial intelligence.
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Shares of the company closed at $32.53 versus an IPO price of $21. Fermi sold 32.5 million shares after pricing them within a marketed range of $18 to $22.
The trading gave the Amarillo, Texas-based REIT, which was co-founded by former US Secretary of Energy Rick Perry, a market value of about $19.3 billion based on the outstanding shares listed in its filings. The company’s shares debuted on the Nasdaq Global Select Market on Wednesday and are expected to begin trading on the London Stock Exchange on Thursday.
The onset of AI revived interest in companies that produce power, and investors have driven up shares for firms including NRG Energy Inc. and Vistra Corp. on hopes that they’re effective proxies for the booming technology. Fermi is the latest to get a boost, even though it hasn’t generated any revenue since its formation in January.
“There are limited ways to play the AI energy demand angle,” said Morningstar analyst Travis Miller. “Investors are looking for new ways to play this theme when the traditional power producers have already run up.”
Rick PerryPhotographer: Brian Kaiser/Bloomberg
Fermi’s “Project Matador” is a development-stage advanced energy and data center campus with more than 5,000 acres of land leased from Texas Tech University. Fermi also refers to the site as the President Donald J. Trump Advanced Energy and Intelligence Campus.
The company hopes to draw data center and hyperscaler tenants and expects to have one gigawatt of power online by the end of next year, according to filings. By 2038, Fermi aims to have up to 11 gigawatts of power to run computing centers on-site through a mix of natural gas, solar energy and nuclear power.
Perry, who was governor of Texas prior to serving in President Donald Trump’s cabinet during his first term, is a director at Fermi. The company had a net loss of $6.37 million from its inception through the end of June, its filings show.
The public listing is a massive windfall for Fermi’s founding team. Perry owns shares worth about $540 million as of Wednesday’s close, according to the Bloomberg Billionaires Index. In addition, his son Griffin independently controls a $2.4 billion stake.
They aren’t the largest shareholders, though. Chief Executive Officer Toby Neugebauer controls a stake worth more than $4.5 billion, according to Bloomberg’s wealth index. That figure includes shares held by his wife Melissa and his father, former Texas congressional representative Randy Neugebauer.
Toby Neugebauer previously led “anti-woke” banking startup GloriFi, which went bankrupt in 2023.
Data Center Demand
Data centers globally are projected to consume more than 4% of electricity by 2035, which — if the sector were a country — would rank fourth in electricity use behind only China, the US and India, according to BloombergNEF. That’s compelled companies and electric grids to race to meet a demand surge that hasn’t been seen in the US in decades.
The boom in power demand has ushered in a golden age for energy, including for fuel sources such as nuclear that had fallen out of favor. Hyperscalers including Meta Platforms Inc. and Microsoft Corp. have recently struck deals with nuclear operators as they chase carbon-free power for their data centers that’s available around the clock.
Fermi’s listing is potentially a sign of “late-stage AI excitement,” said Paul Nolte, market strategist and senior wealth adviser at Murphy & Sylvest Wealth Management.
“The risk is the marketplace is already, maybe not saturated with it, but certainly the marketplace has already got a lot of those companies in place that are viable and have proven product,” Nolte said.
Rob Thummel, senior portfolio manager at energy-focused investment firm Tortoise Capital, which invested in the IPO, acknowledged that Fermi will have to find a way to generate revenue, but said it offers strong growth potential.
“There’s a strong demand to get these data centers built and get access to electricity,” Thummel said. “These megacap techs want electricity, and they want it now.”
The Trump administration has put a lot of weight behind the AI sector as the US races to beat China in scaling AI.
“That is the existential threat, is losing that AI arms race,” Interior Secretary Doug Burgum said Tuesday via video call at an event in Los Angeles hosted by real estate investment trust Prologis Inc. “We’ve got to be thinking about how do we build these artificial intelligence factories, the place where we’re manufacturing intelligence, close to where the power is produced.”
Burgum chairs the White House’s National Energy Dominance Council, which was set up to shorten permitting timelines and shaping energy policy.
Fermi’s offering was led by UBS Group AG, Evercore ISI, Cantor Fitzgerald and Mizuho. The shares trade under the symbol FRMI.
—With assistance from Bailey Lipschultz.
(Updates with shares in first three paragraphs and with comments throughout.)
