For a short period of time, no startup rode the data center boom quite like Fermi Inc.
Co-founded by a former Texas governor and a brash entrepreneur, Fermi gave companies competing to build data centers the two things they most coveted: open space and surprising amounts of power.
The company leased land near Amarillo and plans to build a power plant there that would generate 17 gigawatts of electricity, three times the amount New York City typically consumes. Hyperscalers can set up data centers on the site itself and draw directly on power, initially from natural gas turbines and later from nuclear reactors.
The offer met a number of criteria, including artificial intelligence, nuclear power, and political connections, so some investors found it attractive. Fermi went public in October with a market capitalization of more than $19 billion, even though it doesn’t report revenue or contract customers.
Now, the startup’s board has fired CEO Toby Neugebauer after months of negotiations failed to land a single customer. Chief Financial Officer Miles Everson also resigned. Never one to remain silent, Neugebauer claimed he was fired without cause and called for the immediate sale of the company he co-founded with former Gov. Rick Perry, who also served as energy secretary during Trump’s first term.
Fermi said in Thursday’s filing that Neugebauer was fired for violating his employment contract and company policy, but did not provide further details. The company also revealed that Neugebauer has been removed from its board of directors, after initially reporting that he would remain on the board.
In response, Neugebauer called the board’s actions “completely misguided” and said he would continue to work to maximize value for shareholders. On Friday, he filed suit against the company and three directors for alleged unfair dismissal.
“As a co-founder and largest shareholder who has yet to sell a single share, there is no one who believes more in the future of what we have built at Fermi than I do,” he said in a statement to Bloomberg on Friday. He otherwise declined to comment for this article.
Meanwhile, Fermi stock has fallen 84% from its all-time high. The company’s more than 5,000-acre site on its Texas estate, dubbed Project Matador, or President Donald J. Trump’s Advanced Energy Intelligence Campus, remains largely unfinished. Some analysts also see it as a warning that the market’s AI frenzy is ahead of reality, with investors betting on companies whose grandiose projects may never be built.
“Going from zero to a 17 gigawatt AI hypercampus before we had a single tenant or $1 in project financing was a huge feat in retrospect,” said Tim Schneider, an energy analyst and founder of Schneider Capital Group.
Fermi is not actively pursuing a sale, the company said in a statement. The board had been considering firing Mr. Neugebauer for some time, but said in a statement that his resignation resulted in “positive feedback” from investors, potential tenants, vendors and other partners on the project.
“Given the recent leadership changes that position the company for the next chapter of its growth and evolution from a start-up to a large company, the company believes that a sale is not in the best interest of Project Matador’s continued momentum, ability to serve potential tenants, and long-term value creation for shareholders,” the statement said. Fermi declined to comment on the matter beyond what was said in its press release and regulatory filings.
The son of a former Texas congressman, Mr. Neugebauer first made his name and fortune in 1998 as a co-founder of Quantum Energy Partners, a Houston-based private equity firm specializing in oil and gas. He left after the company made big profits from early bets on the Barnett Shale natural gas field at the beginning of the U.S. shale boom.
Neugebauer continued to maintain his family’s interest in politics. He became so close to Sen. Ted Cruz (R-Texas) and was so involved in his fundraising that the Texas Tribune called him Cruz’s “consigliere.” He is also friends with Mr. Perry, who once hosted Mr. Neugebauer on his private jet when he was governor, according to the Texas Observer. (A spokesperson for Mr. Perry declined to comment for this story, but said, “Rick Perry always complied with all travel-related ethics requirements during his tenure as governor, often paying his own expenses.”)
Neugebauer’s most famous post-quantum venture was one that blended both business and politics. He raised $50 million to launch an “anti-woke” banking startup called GloriFi in 2022, but the company ended up filing for Chapter 7 bankruptcy the following year. He is currently being sued by GloriFi’s bankruptcy trustee, charging him with securities fraud, misrepresentation to investors, and gross negligence. Mr. Neugebauer responded that an independent investigation had found no wrongdoing on his part, and filed his own lawsuit accusing the investors of a coordinated attack designed to damage his reputation.
With Fermi, Neugebauer saw an opportunity to capitalize on the enthusiasm for building AI-inspired data centers. The location of the project was key.
The site, leased from the Texas Tech University System, is at the intersection of several natural gas pipelines, one of which Fermi has agreed to use. This connection will provide enough gas to provide approximately 2 gigawatts of electricity generation. This is more than enough power for the first round of tenants. The land is also close to America’s largest nuclear weapons production facility, which could ease the permitting process for the reactor Fermi (named after Enrico Fermi, the physicist who developed the world’s first nuclear reactor) plans to install.
It cannot be overstated how attractive 17 gigawatts of power is to investors, and how difficult it is to build. One gigawatt is roughly equivalent to the output of a large nuclear reactor and can power about 750,000 average homes. Most gas-fired power plants don’t produce that much electricity. Hyperscalers now want to build energy-hungry data centers, with peak power demand in Texas alone expected to quadruple over the next six years, increasing by 282 gigawatts. No one knows how to meet your needs.
While the idea of providing data centers with their own dedicated off-grid power sources may sound appealing, former U.S. Department of Energy official Jigar Shah said banks don’t want to fund it. He said a power grid that provides power from many sources is more reliable than a small number of expensive on-site power plants.
He considers Fermi a failure of “monstrous proportions” and says similar off-grid data center projects elsewhere deserve more skepticism than they have received thus far. The company has a contract for a 0.2 gigawatt connection to the local power grid, which Neugebauer said in an interview last month is insurance to help Matador ramp up.
“We are allowing these types of projects to continue to be considered viable even when we are certain they are not viable,” said Shah, who led the department’s Office of Financing and Planning in the Biden administration.
Fermi’s plan would be difficult to implement, but the political tailwinds appeared to be a tailwind.
Mr Perry and his son Griffin signed on as co-founders of Fermi, and the company incorporated in early 2025 after Mr Trump returned to office, deciding that the US should “dominate” the burgeoning AI industry. During his first earnings call in November, Neugebauer boasted that President Trump’s current Energy Secretary Chris Wright and Interior Secretary Doug Burgum intervened in trade negotiations with Germany to help Fermi secure gas turbines from Siemens Energy.
For Fermi’s plan to work, the company would need to land at least one anchor tenant, which would allow the project to be financed. In November, the company reached a $150 million deal with a potential tenant. But the following month, Fermi reported in a filing that the deal fell through and its stock fell 46%.
Fermi’s filing does not identify the customers who were rejected. But Neugebauer told Business Insider that the tenant in question is Amazon.com, and a person familiar with the discussions confirmed Amazon’s identity to Bloomberg this week. Negotiations between the two companies broke down after Amazon sought to shorten the contract from 20 years to 15 years, and Amazon estimated that Matador’s power supply would definitely be lower than Fermi’s proposal, the people said. Amazon declined to comment on the reported talks and said the company had no recent business involvement with Fermi.
In February, the Amarillo Globe-News reported that construction on the Fermi site had been paused. As of April, little improvements at the site had yet been constructed, according to a widely circulated short seller report. “There really was a lot of soil. It was dream soil,” an investor who visited the site in February told short seller Fuzzy Panda Research.
Neugebauer continued to pitch. Wearing his usual tweed jacket, he worked in a room at the Semaphore World Economic Conference in Washington, D.C., last month, following another Fermi employee carrying a stack of prize cowboy hats. However, on April 17, the board of directors fired him as CEO.
This split leaves Fermi in an awkward position. Mr. Neugebauer remains the company’s largest shareholder, with a stake worth about $1.4 billion, according to the Bloomberg Billionaires Index. His sons own restricted stock units worth a combined grant date of $68.5 million, according to recent company filings.
Meanwhile, Mr. Perry will retain his board seat and stock ownership worth approximately $80 million. Perry’s son, Griffin, held just over $300 million in stock and sold 15% of his stake for $56 million after the lock-up period ended in March. Griffin Perry did not respond to requests for comment.
Fermi University’s land lease agreement with Texas Tech University, reviewed by Bloomberg News, gives the university the right to terminate the lease if Texas Tech University fails to secure a tenant by the end of last year. However, after Mr. Neugebauer’s firing, the school system expressed continued support for Mr. Fermi.
“Project Matador has the potential to have a generational impact not only on TTUS, but on national security, America’s energy independence, and the future of advanced research and industry in West Texas,” Chancellor Brandon Creighton said in a Fermi press release announcing the executive changes.
For now, the board has set up an interim “CEO office” with two co-presidents taking over Mr. Neugebauer’s role, while a permanent replacement is sought. Despite the stock’s slump, some analysts say they are encouraged by the change, saying Mr. Neugebauer’s own overzealous personality may have been an obstacle to attracting tenants.
“While this transition changes the ‘tone at the top,’ we see the same operational tenacity and vitality the industry has seen,” Evercore analyst Nicholas Amicucci said in a note.
Ma and Malik write for Bloomberg.
