Data Center Startup Fermi Promised Nuclear Power For Ai. But It Couldn't Sign A Single Client

For a little moment, nary startup rode nan information halfway roar amended than Fermi Inc.

Co-founded by a erstwhile Texas politician and a brash entrepreneur, Fermi offered companies racing to build information centers nan 2 things they crave most: unfastened onshore and an astonishing magnitude of power.

The patient leased a tract adjacent Amarillo connected which it planned to build powerfulness plants generating 17 gigawatts of energy — 3 times nan magnitude typically consumed by New York City. Hyperscalers could instal their information centers connected nan tract itself and pat straight into that power, which would travel first from earthy state turbines and later from atomic reactors.

The transportation ticked truthful galore boxes — artificial intelligence, atomic energy, governmental connections — that immoderate investors recovered it irresistible. Fermi went nationalist successful October worthy much than $19 cardinal successful marketplace value, contempt reporting nary gross aliases signed customers.

Now, nan startup’s committee has fired its apical executive, Toby Neugebauer, aft months of negotiations grounded to unafraid a azygous client. Chief Financial Officer Miles Everson near arsenic well. Not 1 to spell quietly, Neugebauer claimed he was removed without origin and called for an contiguous waste of nan institution he co-founded pinch ex-governor Rick Perry, who besides served arsenic caput of power during President Donald Trump’s first term.

Fermi, successful a filing Thursday, said Neugebauer was fired for behaviour that violated his employment statement arsenic good arsenic nan company’s policies but did not springiness further details. The institution besides said he had been removed from nan committee of directors, aft initially reporting that Neugebauer would stay connected nan board.

Neugebauer, successful response, called nan board’s actions “completely misguided” and said he would proceed trying to maximize worth for nan company’s shareholders. On Friday, he sued nan institution and 3 of its directors, alleging wrongful termination.

“As a co-founder and nan largest shareholder who has yet to waste a azygous share, nary 1 believes much successful nan early of what we built astatine Fermi than I,” he said Friday successful a connection to Bloomberg. He different declined to remark for this story.

Fermi’s stock, meanwhile, has tumbled 84% from its peak. The company’s much than 5,000-acre tract successful nan Texas panhandle — dubbed Project Matador, aliases nan President Donald J. Trump Advanced Energy and Intelligence Campus — remains mostly unfinished. And immoderate analysts spot a cautionary communicative of nan market’s AI enthusiasm moving up of reality, pinch investors betting connected companies whose expansive projects whitethorn ne'er get built.

“Going from zero to a 17-gigawatt AI hyper field successful 1 leap earlier they had a azygous tenant aliases a dollar of task finance — that was a batch successful hindsight,” said Timm Schneider, an power expert and laminitis of nan Schneider Capital Group.

Fermi is not actively pursuing a sale, according to a institution statement. The committee had considered removing Neugebauer for a while, and his departure has prompted “positive feedback” from investors, imaginable tenants, vendors and different partners successful nan project, nan connection said.

“Given caller changes successful leadership, which position nan Company for its adjacent section of maturation and improvement from a startup to a scaled enterprise, nan Company firmly believes a waste is not successful nan champion liking of its continued momentum connected Project Matador, expertise to service imaginable tenants and semipermanent worth creation for shareholders,” nan connection read. Fermi declined to remark for this communicative beyond nan statements made successful its property releases and regulatory filings.

The boy of a erstwhile Texas congressman, Neugebauer first made his sanction and his luck arsenic a co-founder of Quantum Energy Partners successful 1998, a Houston-based backstage equity patient focused connected lipid and gas. He near aft nan patient scored large connected an early stake successful nan Barnett Shale earthy state field, conscionable arsenic nan US shale roar was getting underway.

Neugebauer kept up nan family liking successful politics. He grew adjacent capable to Senator Ted Cruz, and truthful progressive successful his fundraising, that nan Texas Tribune referred to him arsenic Cruz’s “consigliere.” He besides befriended Perry, who arsenic politician erstwhile accepted a formation connected Neugebauer’s backstage jet, according to nan Texas Observer. (A spokesperson for Perry, who different declined to remark for this story, said, “At each times during his tenure arsenic Governor, Rick Perry complied pinch each travel-related morals requirements — often paying expenses retired of pocket.”)

Neugebauer’s best-known post-Quantum task blended some business and politics. He raised $50 cardinal to motorboat an “anti-woke” banking startup called GloriFi successful 2022, only to spot it record for Chapter 7 bankruptcy nan pursuing year. He’s now being sued by GloriFi’s bankruptcy trustee complete allegations including securities fraud, misrepresentations to investors and gross negligence. Neugebauer responded that an independent investigation recovered nary wrongdoing connected his part, and he revenge his ain suits against investors, accusing them of moving a coordinated onslaught to destruct his reputation.

With Fermi, Neugebauer saw an opportunity to pat into nan AI-inspired frenzy to build information centers. The task location was nan key.

Leased from nan Texas Tech University System, nan tract lies wrong nan crossroads of respective earthy state pipelines, of which Fermi has an statement to pat one. That relationship would supply capable state to proviso astir 2 gigawatts of powerfulness procreation — much than capable energy for an first information of tenants. The onshore is besides adjacent America’s largest atomic weapons accumulation facility, perchance easing nan permitting process for nan reactors that Fermi — named aft physicist Enrico Fermi, creator of nan world’s first atomic reactor — plans to install.

It’s difficult to overstate really tantalizing to investors, and difficult to build, 17 gigawatts of powerfulness is. A azygous gigawatt is astir nan output of a ample atomic reactor and tin proviso astir 750,000 mean homes. Most gas-fired plants don’t nutrient that overmuch electricity. Now, hyperscalers want to build truthful galore energy-hungry information centers that successful Texas alone, highest energy request is expected to quadruple successful nan adjacent six years, rising by 282 gigawatts. No one’s judge really to meet nan need.

The thought of giving information centers their own, dedicated powerfulness proviso not limited connected nan grid whitethorn sound tempting, but erstwhile US Department of Energy charismatic Jigar Shah said banks don’t want to finance it. The grid, drafting powerfulness from galore sources, is much reliable than a fistful of expensive, on-site plants, he said.

He considers Fermi a nonaccomplishment “of monumental proportions” and says similar, off-grid information halfway projects elsewhere merit much skepticism than they’ve received. The institution does person an statement for a .2 gigawatt relationship to nan section grid, but Neugebauer, successful an question and reply past month, described it arsenic an security argumentation to thief Matador get up and running.

“We’re allowing these types of projects to proceed to beryllium viewed arsenic viable erstwhile they astir surely are not,” said Shah, who ran nan department’s Loan Programs Office during nan Biden administration.

While executing Fermi’s scheme would beryllium hard, governmental tailwinds seemed favorable.

Perry and his boy Griffin signed connected arsenic Fermi’s co-founders, and nan institution incorporated successful early 2025 arsenic Trump returned to office, wished that nan US should “dominate” nan fast-growing AI industry. On nan company’s first net telephone successful November, Neugebauer bragged that Trump’s existent power secretary, Chris Wright, and Interior Secretary Doug Burgum had intervened successful waste and acquisition negotiations pinch Germany to thief Fermi unafraid state turbines from Siemens Energy AG.

For Fermi’s scheme to work, nan institution needed to onshore astatine slightest 1 anchor tenant, which would past thief unlock task financing. In November, nan institution reached a $150 cardinal statement pinch a imaginable tenant. But nan pursuing month, Fermi reported successful a filing that nan woody had fallen through, triggering a 46% sell-off successful nan company’s stock.

Fermi’s filing didn’t place nan customer who balked. But Neugebauer told Business Insider nan tenant successful mobility was Amazon.com Inc., and group acquainted pinch nan discussions confirmed Amazon’s personality to Bloomberg this week. Talks betwixt nan companies, nan group said, collapsed down aft Amazon sought to trim nan contract’s long from 20 years to 15 years, and aft nan tech elephantine estimated that Matador would reliably proviso little energy than Fermi proposed. Amazon declined to remark connected nan reported talks and said nan institution has had nary caller business engagements pinch Fermi.

In February, nan Amarillo Globe-News reported building had paused astatine Fermi’s site. By April, tract improvements were still mostly unbuilt, according to a widely-circulated short seller report. “Really, location was conscionable tons of dirt. It was a portion of ungraded pinch a dream,” an investor who visited nan tract successful February told nan short sellers, Fuzzy Panda Research.

Neugebauer kept pitching. Clad successful his accustomed tweed jacket, he worked nan rooms astatine nan Semafor World Economy convention successful Washington, D.C. past month, trailed by different Fermi worker carrying a stack of giveaway cowboy hats. But connected April 17, nan committee removed him arsenic CEO.

The divided leaves Fermi successful an awkward position. Neugebauer remains nan company’s largest shareholder, pinch a liking worthy astir $1.4 billion, according to nan Bloomberg Billionaires Index. His sons clasp restricted banal units pinch a mixed assistance day worth of $68.5 million, according to a caller institution filing.

Perry, meanwhile, retains his committee spot and his banal holdings, worthy astir $80 million. Perry’s boy Griffin has shares worthy conscionable complete $300 cardinal and sold 15% of his liking for $56 cardinal aft a lock-up play ended successful March. Griffin Perry did not respond to requests for comment.

Fermi’s crushed lease statement pinch Texas Tech, reviewed by Bloomberg News, gave nan assemblage nan correct to terminate nan lease if nan institution couldn’t unafraid a tenant by nan extremity of past year. But aft Neugebauer’s removal, nan schoolhouse strategy signaled its continued support for Fermi.

“Project Matador has nan imaginable to present generational impact—not conscionable for TTUS, but for nationalist security, American power independence, and nan early of precocious investigation and manufacture successful West Texas,” said Chancellor Brandon Creighton successful a Fermi property merchandise announcing nan executive changes.

For now, nan committee has created an interim “Office of nan CEO,” pinch 2 co-presidents taking complete Neugebauer’s domiciled while a imperishable replacement is sought. Although nan banal has been battered, immoderate analysts are encouraged by nan changes, saying Neugebauer’s ain hard-charging characteristic whitethorn person been an obstacle to landing a tenant.

“We position this modulation arsenic changing nan ‘tone astatine nan top’ but maintaining nan aforesaid tenacity and vigor nan manufacture has seen from an operational perspective,” said Evercore expert Nicholas Amicucci successful a note.

Ma and Malik constitute for Bloomberg.