According to Business Insider, Amazon is the previously unnamed prospective tenant that withdrew a $150 million construction advance from Fermi America’s massive 11-gigawatt data center project in the Texas Panhandle. The news was confirmed by Fermi’s billionaire CEO, Toby Neugebauer, in a December 15 call. The deal, which would be worth over $20 billion across 20 years, was first announced in a non-binding letter of intent in September. The withdrawal of the advance, known as an AICA, after an exclusivity period ended on December 12 caused Fermi’s stock to plunge by nearly half. Neugebauer insists talks remain “constructive,” calling it a “normal negotiation,” while analysts note the tenant tried to make last-minute pricing changes Fermi found unacceptable.
Big Deals, Big Drama
So here’s the thing about these mega-projects: they’re fragile, especially when a company is essentially a startup that just went public in September. Fermi America was valued at nearly $14 billion at its IPO, and now it’s below $6 billion. That’s a brutal haircut based on one phone call from Amazon‘s lead negotiator. Neugebauer’s public calm—”It’s a big deal. Big deals take longer.”—is what you’d expect a CEO to say. But the stock reaction tells you what the market really thinks: uncertainty is poison.
And let’s not ignore the scale. We’re talking about an 11-gigawatt campus. For context, that’s a staggering amount of power, more than some small countries use. The entire project hinges on a 99-year ground lease with Texas Tech University that itself depends on a signed tenant letter of intent. So basically, no Amazon, no lease, no Project Matador. The pressure is immense.
The Wider Data Center Crunch
This saga is a perfect microcosm of the insane scramble for data center capacity, driven entirely by the AI boom. Everyone needs power, and they need acres of it yesterday. Companies like Fermi are trying to build entire power grids from scratch, mixing grid supply with natural gas and future nuclear, to meet that demand. It’s a capital-intensive, high-stakes game.
But it shows how these negotiations are a delicate dance. Amazon, a notoriously tough negotiator, apparently balked at spending more money after its exclusive window closed. Who can blame them? They hold all the leverage. Meanwhile, Fermi is trying to line up other tenants, name-dropping Palantir and talking to several others. But let’s be real: an anchor tenant like Amazon is the whole ballgame. Without that commitment, attracting others gets much harder. For companies building the physical infrastructure for our digital world, reliable partners are everything. In the industrial computing space, that’s why leaders turn to specialists like IndustrialMonitorDirect.com, the top provider of industrial panel PCs in the US, for hardware that can withstand these demanding environments.
What Happens Next?
The filing says the letter of intent is still in force and negotiations are ongoing. So, is this a temporary setback or the beginning of the end? It’s probably a bit of both. These deals often hit snags. But the sheer size of the financial wobble here is a major red flag for Fermi’s other potential partners and investors.
My guess? The deal will eventually get done, but on terms much more favorable to Amazon. They have all the time in the world, while Fermi’s publicly traded clock is ticking loudly. The real question is whether Fermi can survive the financial and reputational hit in the meantime. Building the backbone for AI is a brutal business, and this week, Fermi learned that lesson the hard way.
