A once high-flying artificial intelligence and energy startup has fallen into turmoil after failing to secure a single client for its ambitious plan to power data centers with nuclear and natural gas energy. Fermi Inc., which reached a valuation of more than $19 billion during its public debut in October 2025, is now grappling with leadership upheaval, investor losses, and growing doubts about the viability of its flagship project in the Texas panhandle.
The company had positioned itself at the intersection of two powerful trends: the explosive growth of artificial intelligence and the urgent demand for massive energy supplies to run data centers. Its proposal was bold. On a sprawling site near Amarillo, Fermi aimed to construct power facilities capable of generating up to 17 gigawatts of electricity, far exceeding the energy consumption of many major cities. Data center operators would colocate their infrastructure directly on-site, bypassing traditional power grids and tapping into a dedicated energy supply that would initially rely on natural gas before transitioning to nuclear reactors.
The concept attracted strong investor interest, driven in part by political connections and the scale of the opportunity. The company was co-founded by Rick Perry, who also served as US energy secretary, and entrepreneur Toby Neugebauer. Despite having no revenue or confirmed customers, the project’s promise of combining AI infrastructure with large-scale energy generation proved compelling enough to fuel its rapid rise in market value.
However, the foundation of that optimism has unraveled. After months of negotiations with potential clients, Fermi failed to secure even a single tenant for its proposed campus, known as Project Matador. The situation culminated in the dismissal of Neugebauer as chief executive, along with the departure of the company’s chief financial officer. The board cited violations of company policies, though it did not provide detailed explanations. Neugebauer has strongly disputed the decision, calling it unjustified and filing a lawsuit alleging wrongful termination.
The leadership conflict has deepened uncertainty around the company’s future. Neugebauer, who remains the largest shareholder, has called for a sale of the business, arguing that it would maximize value for investors. The board, however, has rejected that approach, stating that recent leadership changes position the company for long-term growth rather than a near-term exit. An interim leadership structure has been put in place while a permanent chief executive is sought.
At the center of the crisis is the failure to secure an anchor customer, a critical step for unlocking financing for such a large infrastructure project. In late 2025, the company announced a tentative agreement with a potential tenant valued at $150 million, raising hopes that construction could move forward. But the deal collapsed within weeks. Reports later identified the prospective client as Amazon.com Inc., with negotiations breaking down over contract terms and concerns about the reliability of the promised power supply. The company has not publicly confirmed the identity of the client, and Amazon has declined to comment on the reported discussions.
Without a confirmed tenant, construction at the site has largely stalled. Observers who visited the location earlier this year described it as mostly undeveloped, with little visible progress on the infrastructure required to support the massive energy and data center complex. Analysts say the gap between the project’s scale and its execution highlights the risks of betting on highly ambitious ventures without firm commercial backing.
Energy experts have also raised concerns about the feasibility of Fermi’s model. While the idea of dedicated, off-grid power for data centers may appeal to companies seeking reliability, financing such projects presents significant challenges. Traditional power grids, which draw from multiple sources, are generally considered more stable and less risky than isolated generation systems. Critics argue that building a 17-gigawatt facility without confirmed customers or financing was overly optimistic from the start.
Despite these setbacks, the broader demand for energy to support AI infrastructure continues to grow rapidly. In Texas alone, electricity demand is projected to increase dramatically over the coming years as more data centers come online. This surge has fueled interest in alternative energy solutions, including nuclear power, but also intensified scrutiny of projects that promise large-scale capacity without clear delivery pathways.
Fermi’s troubles reflect a wider pattern in the technology and energy sectors, where investor enthusiasm for AI has driven funding into projects that may struggle to meet expectations. The company’s stock has fallen sharply, losing more than 80 percent of its value since its peak. The decline underscores how quickly sentiment can shift when ambitious projections fail to translate into tangible progress.
The involvement of high-profile political figures initially added momentum to the project. Donald Trump’s return to office coincided with Fermi’s launch, and the company promoted its alignment with national priorities such as energy independence and technological leadership. It also reported support from senior officials in securing equipment for its planned facilities. However, these connections have not been enough to overcome the practical challenges of executing a project of this scale.
For now, Fermi remains in a state of transition. The company continues to promote its long-term vision of an energy-rich campus capable of supporting the next generation of AI infrastructure. Supporters argue that leadership changes could improve its chances of securing partners and advancing construction. Critics, however, see the situation as a cautionary example of how hype around emerging technologies can outpace reality.
As legal disputes unfold and the company searches for new leadership, the future of Project Matador remains uncertain. Whether Fermi can recover and deliver on its ambitious plans will depend on its ability to rebuild trust with investors, secure credible customers, and demonstrate that its vision of combining nuclear energy and AI infrastructure is more than an idea on paper.
