By Kennedy Maize
Fermi America’s 17-GW, $60 billion AI data center planned for 7,500 acres on the arid Texas panhandle, which would combine nuclear and fossil generation, has a serious nuclear weakness, according to the Institute for Energy Economics and Financial Analysis.
The troubled and conflict-ridden Texas-based firm Fermi Inc. (NASDAQ:FRMI), doing business as Fermi America, says it will include four Westinghouse AP-1000 nuclear units totaling 4,456-MW of generating capacity, along with other generation in what it describes as a “hypergrid” project dubbed “Project Matador.”
When it comes to the nukes, says IEEFA analyst Dennis Wamsted, “There is only one problem: they want to completely change the cooling system to an unproven, unlicensed design.”
Noting the project’s site in a “water stressed region,” Wamsted writes, “The problems with Fermi America’s plans have been evident from its initial licensing filings submitted to the Nuclear Regulatory Commission (NRC). In one section, the company declared: ‘The operational phase of the AP1000 units at Fermi America will not rely on wet cooling towers. Instead, air-cooled condenser (ACC) systems significantly reduce consumptive water use, limiting demand to system makeup, domestic supply, and incidental process needs.’”
In another part of its NRC filing, Fermi “acknowledged that the specifics of the cooling system have not yet been designed: ‘Fermi America’s cooling system TO BE PROVIDED LATER [emphasis in original].'”
The IEEFA analysis observes that the technical questions about the project “have gone largely unanswered, overshadowed by the recent corporate blowup in which Toby Neugebauer, one of Fermi’s founders, was removed as CEO, and the company’s CFO, Miles Everson, resigned.” 
Fermi America is only 18-months old, organized as a real estate investment trust (REIT) on January 10, 2025. Its most recent Securities and Exchange Commission filing reported a first quarter 2026 loss of $189 million ($.30/share). The company has pitched its stock as a way for investors to reap the rewards of the artificial intelligence boom.
As Business Insider has reported, that may be misleading: “Under IRS rules, REITs have to earn most of their money from things like rent, dividends, or mortgage interest. They pass on most of their earnings to shareholders as dividends and don’t have to pay corporate income tax. If a REIT runs afoul of those guidelines, it can be a big deal. ‘Public statements describing the company as an ‘operating company’ or ‘utility’ can be scrutinized if they contradict how income and assets are classified for REIT purposes,’ Jussi Askola, the founder of Leonberg Capital, told Business Insider. ‘Substance matters more than labels, but careless language increases risk.’”
One of Fermi’s founders was Rick Perry, former Republican governor of Texas and Donald Trump’s first energy secretary, from March 2017 to December 2019. His role in the new company is largely image and political influence. The chief founder of the company was billionaire venture capitalist Toby Neugebauer, who has a sketchy business history according to Houston Chronicle columnist Chris Tomlinson.
Fermi launched an initial public offering last September, offering 25 million shares at an expected $18-$22 per share. The sale was successful. In March at the Nuclear Regulatory Commission’s annual Regulatory Information Conference, the company said it would break ground on Project Matador this year.
The company’s prospects started to turn nasty early as its hype began colliding with reality: no revenue, no commercial tenant for its non-existent data center, losses totaling close to $500 million, a plunging share price. In April, without a public announcement, CEO Neugebauer “resigned,” taking with him Chief Financial Officer Miles Everson. The share price hit $5.
Litigation ensued. Neugebauer, who was essentially fired, in June launched a proxy battle attempting a hostile takeover. He called on shareholders to support a special board of directors meeting to elect his slate of officers.
On July 3, Neugebauer announced he was calling off the proxy fight. In a news release, he asserted, “More than 70% of votes cast to date have been in favor of calling a special meeting, underscoring shareholders’ demand for a special meeting to determine Fermi’s future.” The firm’s bylaws require a 70% majority to call a special meeting.
Neubegbauer said he dropped the fight after the judge in the case recused himself, “setting the proxy on an untenable timeline for shareholders.” Fermi’s management said drily, “Mr. Neugebauer’s failed proxy campaign is over, and there will be no Special Meeting.”
Fermi’s shares closed July 10 at $6.59, down 73 cents or slightly less than 10%.
IEEFA’s analysis of the Fermi business opera concluded, “While the corporate shakeup and resulting stock battle have garnered most of the recent headlines, the questions regarding how the reactors will be cooled are as important, if not more so, than the startup’s executive structure. Indeed, these questions tell a story about the uncertainty surrounding Fermi’s nuclear construction plans, and point to significant risks both for investors considering funding the construction of the massive nuclear power plant complex, and data center developers and customers looking to lock in electricity supplies at competitive prices and on definitive timelines.”
The broader message, the analysis said, is that “Fermi’s plan to use a cooling system that is both unique and unlicensed is the opposite of standardization, and raises the real possibility that the cycle of cost overruns and construction delays that has plagued the U.S. nuclear industry will continue.”
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