Business
Rick Perry’s AI power startup Fermi already has a $16 billion market cap—and zero revenue
Backed by the former U.S. energy secretary and Texas governor Rick Perry, AI power startup Fermi Inc. went from nonexistent to an October IPO with a mammoth $16 billion market cap in less than a year without any announced customers or construction—or even a single dollar of revenue.
The electricity player pledges to build a sprawling “HyperGrid” of nuclear, solar, and gas-fired power to support massive data center complexes in the rural Texas Panhandle—enough to eventually power 8 million homes. The highly successful IPO demonstrates that investor frothiness for the AI boom is far from slowing down.
Amarillo-based Fermi is unabashedly benefitting from the Trump administration: The company is led by the president’s former energy secretary and a CEO who’s the son of a retired Republican congressman. Fermi, which has support from the White House, is even tentatively naming its site the “President Donald J. Trump Advanced Energy and Intelligence Campus”—a venture nearly as ambitious as OpenAI and Oracle’s “Stargate” AI venture, almost 300 miles away near Abilene, Texas.
“There’s no way we were going to do a large-scale, gas-powered AI campus in the Biden administration. They were completely focused on renewables. Absolutely, the change in leadership made it possible for a project like this to occur,” said Fermi cofounder and CEO Toby Neugebauer, the son of retired congressman Randy Neugebauer.
The confluence of the AI boom, election results, and political and industry connections make the Fermi team and its site perfectly positioned to build the necessary power infrastructure, said Neugebauer, who’s best-known for cofounding the energy-focused private equity firm Quantum Energy Partners, now Quantum Capital Group.
“We are the solution to the AI bubble,” Neugebauer told Fortune. “There is an AI bubble, but not in the way you think. The bubble is that you can’t achieve the growth rates these hyperscaler companies are talking about without a massive increase in electrons.”
Simply put, “We cannot burden the grid and the consumers with AI power, so we’re building them their own private utility.”
The Fermi plan aims to bring the first gas-fired power generation online in the spring, essentially bypassing the long queue for gas turbines by purchasing a combination of refurbished secondhand equipment and “unboxed” turbines from failed projects. Fermi would then add solar and battery-storage power and, eventually, a fleet of nuclear power reactors. The goal is to build 11 gigawatts of power—double the average power demand of New York City—at an ambitious pace of 1 gigawatt per year. Each gigawatt is roughly the equivalent of powering 750,000 homes.
In its upsized IPO this month, Fermi sold 32.5 million shares at $21 each after marketing them between $18 and $22, making Neugebauer and the Perrys—Rick’s son, Griffin, owns a larger stake than he does—billionaires on paper. The stock traded above $26 per share Oct. 10.
Travis Miller, energy and utility analyst for Morningstar, said he saw the Fermi IPO as a litmus test for the ongoing bullishness on date center development. “This is clearly an early-stage venture, but it still got a screaming positive reaction from the market, so there’s still plenty of excitement out there,” Miller said.
“We think investors are taking a big risk to value a company like this with no revenue and limited assets at a price like what it trades for in the market right now,” Miller said. “Investors are basically getting a lease on very cheap land in Texas. That sounds nothing like other companies that are actually operating power plants.
“This is going to be a story of, ‘If you build it, will they come?’”
Rapid startup with a long history
Neugebauer had the massive 5,236-acre site in mind because of its access to natural gas and pipelines, water supplies, potential solar capacity, and, maybe most importantly, its adjacency to the U.S. Department of Energy’s Pantex nuclear weapons assembly site.
The land is owned by the Texas Tech University System and partially leased to the DOE, which has already signed off on Fermi locating there.
“There’s really not another site like it,” Neugebauer said. “The best place to build civilian nuclear is on America’s best nuclear site, so I knew it had the ability to get permitted rapidly.”
Just days after the November presidential election, he approached Rick Perry with the plan. Neugebauer was major political donor to Perry and they’re longtime friends.
As Neugebauer tells it, “When I go to pitch the governor, and I’m literally just sitting down, he goes, ‘Toby, I’ll do anything with you, but I’m not doing a damn nuclear deal. Everybody is pitching me nuclear.’ I said, ‘Dammit, governor, I was going to pitch you Pantex.’ He said, ‘I am doing the Pantex deal.’ He instantaneously knew exactly what I was thinking. He went from a ‘No’ before I even sat down to a ‘Yes’ by the time my butt barely hit the seat because he understood how extraordinary this site is.”
Perry was not available for an interview for this story, but both he and Neugebauer refer to Fermi as the “modern-day Manhattan Project.”
It’s about winning the AI war with nuclear power to help the country thrive and compete against China, Neugebauer said. “A modern superpower will have nuclear-powered submarines, nuclear-powered aircraft carriers, and nuclear-powered artificial intelligence. We don’t view our nuclear power business as a consumer business. We view it as a defense-industry business.”
U.S. Interior Secretary and chairman of Trump’s National Energy Dominance Council, Doug Burgum, supported Fermi with a public statement. “This campus proves that we can integrate natural gas, nuclear energy, and artificial intelligence into a single, powerful ecosystem. Modern energy infrastructure isn’t a luxury; it’s the foundation of global leadership.”
Advancing the supply chain
Fermi has partnered with nuclear leader Westinghouse for four of its advanced modular AP1000 reactors. Those are at least a few years away though.
In the meantime, Fermi will refurbish about 200 megawatts of used gas-fired GE turbines from New Jersey. Fermi also is buying 400 megawatts of new Siemens gas turbines from a stalled gas export project, Firebird LNG, in Suriname. Neugebauer said Fermi aims to have at least 350 megawatts online by the beginning of April.
Fermi has an additional letter of intent with Siemens to deliver 1.1 gigawatts of gas-fired turbines to Amarillo.
Neugebauer gave a lot of credit for the early deals to Perry and to Fermi Chief Power Officer Larry Kellerman, who he worked with at Quantum years ago, and is leading the supply chain contracting.
“Rick Perry is like having the wind at your back every day. He’s a global brand,” Neugebauer said. “I tease him that you used to be a governor and energy secretary, and now you’re just a procurement officer.”
