Fermi finally has a customer—and a 4.8GW path to power

The reported quarter was a narrow earnings beat, not the main story. Fermi posted a $0.04 net loss per share versus a published consensus of approximately $0.05 loss, a modest upside surprise.

The substantive upside is commercial validation. The filing shows Fermi’s first binding customer agreement with TensorWave: $6.5B of contracted Phase 1 revenue tied to 222 MW over 15 years, with expansion options taking the facility to approximately 650 MW. That is a meaningful step beyond a development narrative because it provides a named tenant, contracted capacity and a delivery timetable beginning in the second half of 2027 (First Binding Customer Agreement). The agreement itself was already disclosed before this filing, so the surprise is confirmation and added detail rather than a completely new event.

The Hillcore structure improves the path to scale without immediately adding Fermi project debt. Hillcore is expected to finance, construct, own and operate approximately 2.6 GW of combined-cycle generation, while Fermi acts as anchor offtaker under a 20-year power-purchase agreement. That takes planned on-site generation to 4.8 GW within roughly 30 months, with 350 MW targeted within 24 months of notice to proceed (Hillcore BOOT Strategic Alliance). The important distinction is that this is an offtake-backed infrastructure partnership—not 2.6 GW of Fermi-owned generation—and each block depends on contracted tenant demand.

Liquidity is better, but the balance sheet remains expensive and heavily committed. Fermi raised $431M through 5.00% convertible notes, receiving approximately $417M of net proceeds after transaction costs and capped-call funding (Convertible Senior Notes). That provides flexibility through the development phase, while the capped call materially reduces dilution between the approximately $9.52 conversion price and $14.64 effective cap price. However, Fermi also carried $520M of net debt at June 30, including roughly $445M drawn on turbine financing, $77M on high-voltage financing and $15M on a second turbine facility (Access to Liquidity).

Net: the filing beats a low quarterly bar while materially improving the project’s credibility. The EPS upside alone is too small to change the investment case; the more important shift is from “power campus seeking tenants” to “power campus with one binding tenant and a financed route toward 4.8 GW.” Because the TensorWave agreement and convertible financing were already public, this is best read as a partly anticipated but still meaningful execution update rather than a clean surprise.