Fermi America Locks In $6.5 Billion TensorWave Contract, Doubles Power Capacity to 4.8 Gigawatts Through Novel Zero-CapEx Hillcore Deal
Q2 2026 earnings call, August 13, 2026: New CEO installed, convertible notes upsized, first turbines land in Houston
Fermi America closed out a 90-day turnaround plan that Chairman Marius Haas had staked his credibility on last quarter, delivering all five self-imposed commitments in a single quarter and, in the process, providing investors with the first hard evidence that its power-first data center strategy can convert into signed revenue. The headline item is a binding lease agreement with TensorWave, an AI compute provider, structured across three phases and worth up to 650 megawatts of capacity if all expansion options are exercised. The initial phase alone, a 15-year commitment for 222 megawatts of gross power delivered as a turnkey data center solution, represents approximately $6.5 billion of revenue to Fermi over its term.
TensorWave deal structure and the ecosystem logic behind it
Chief Commercial Officer Anna Bofa was explicit that TensorWave was chosen less for its size than for its position in the AI stack. "TensorWave sits between the semiconductor ecosystem and the ultimate users of that compute, giving Fermi exposure across multiple layers of the market," she said, arguing that the relationship gives Fermi visibility into hyperscaler demand without being dependent on a single hyperscaler counterparty. Economically, the lease is built around a base rent plus a fixed power charge, with the variable energy charge passed through in full to the customer. CFO Rob Masson confirmed there is no hedging required on the commodity side: "There's no reason to hedge. We're not in that business." Management sized the broader market comps for investors modeling the deal: gross power infrastructure runs $3 million to $4 million per megawatt, while turnkey data center buildout runs $10 million to $12 million per megawatt, and the TensorWave contract falls within that range on both counts.
Commencement of revenue is phased, targeting the end of the third quarter or early fourth quarter of 2027, with rent starting on partial capacity as each building is delivered. A critical unresolved piece is the backstop agreement supporting the TensorWave lease obligations, which management says will guarantee the full 15-year term and expects to name the counterparty "in the coming days." That backstop, an investment-grade guarantee, is the gating item before Fermi can move to project financing, which in turn triggers full capital deployment to the site.
Hillcore alliance: doubling capacity without spending Fermi's own capital
The more structurally novel disclosure was the strategic alliance with Hillcore Energy Partners, under a build-own-operate-transfer arrangement that adds roughly 2.6 gigawatts to the Project Matador campus over three years, doubling total site capacity to 4.8 gigawatts. Under the deal, Hillcore finances, builds, owns and operates the incremental generation, with Fermi collecting 100% of base rent as landlord and holding an option to acquire the facility at fair market value after year 10. COO Jacobo Blanes framed the mechanics plainly: "Think of Hillcore as a tenant that pays rent and delivers incremental power to the Fermi private grid," adding that Fermi commits only as tenant leases are signed, matching each power purchase agreement to the lease term that triggers it. That structure shifts construction, operating and performance risk to Hillcore while removing stranded-capacity risk for Fermi, a distinction management leaned on repeatedly when discussing capital discipline. First power under the Hillcore build is targeted within 24 months of notice to proceed, running in parallel with Fermi's own buildout rather than sequentially, and Blanes called the impact on speed to power "transformational" given the 17 gigawatts of land runway still available for further expansion of the model.
New CEO with heavy industrial pedigree
Fermi named Lee McIntire as CEO effective this week, a board member since September 2025 whose career spans Bechtel, McDermott and TerraPower, all organizations built around large-scale project delivery. Haas was direct about the rationale: "When it comes to getting first power to the site in 2027, I can't think of anyone more equipped than Lee." The company is treating this as an interim step rather than a permanent solution, however. A search with Heidrick continues for a longer-term CEO, and Haas indicated the pool of candidates should widen now that the company has signed revenue and a stabilized balance sheet: "We're not going to race to announce a long-term CEO if it isn't the perfect candidate."
Balance sheet strengthened via convertible notes
Fermi closed an upsized offering of more than $430 million in 5% convertible senior notes due 2031, including full exercise of the initial purchasers' option for an additional $56 million. Net proceeds after the capped call structure were approximately $382 million. Masson characterized the capped call as deliberately shareholder-protective, saying it shields current holders from dilution "until the stock price more than doubles." Cash burn for the quarter was down roughly 50% sequentially as the company held to its stated discipline of matching capital outflows to signed commercial progress rather than building ahead of demand.
Physical progress: turbines landed, equipment secured
Three Siemens Energy F-class turbines, each rated above 242 megawatts in simple cycle mode, arrived at the Port of Houston in July and have cleared customs, with Spain's TSK handling fast-start engineering work. Blanes noted the F-class units ramp at 40 megawatts per minute, reach full speed in about five minutes, and carry fleet reliability near 99%, attributes he called essential for AI workloads. Phase 1 power delivery is targeted at 640 megawatts of nameplate capacity by the fourth quarter of 2027, with the first 210 megawatts available by July 1, 2027, drawing on a mix of Siemens SGT-800, GE 6B and TM2500 units plus 200 megawatts of utility power from Xcel.
Regulatory positioning against Texas grid pressure
Asked about Texas Governor Abbott's data center audit, management argued the directive is largely irrelevant to Fermi's model because the company's grid connection runs through Xcel on the SPS system, not ERCOT. Blanes said the state directive is "squarely aimed at protecting Texas ratepayers from the cost of new grid-dependent demand," and that Fermi neither draws from nor burdens the public grid, calling the episode further validation of its behind-the-meter thesis and, if anything, a competitive advantage relative to grid-dependent projects elsewhere in the state.
Management declined to give a specific margin figure on the TensorWave contract, with Masson describing it only as "a modified net structure" comparable to other market deals, and similarly declined to disclose total project CapEx, pointing instead to the per-megawatt comps cited above. Additional customer announcements are expected in the coming months, according to Bofa, with active conversations underway with both neocloud operators and hyperscalers, some of whom are reportedly exploring whether partnering through TensorWave's existing site allocation could get them capacity faster than pursuing a standalone deal.