(TNS) – Fermi America, a Texas-based nuclear and data center startup, was co-founded by former governor Rick Perry, but did not exist earlier this year.
But on Wednesday, Fermi surpassed its own goals for its unusually early debut as a public company, highlighting how much hype there is for the artificial intelligence venture Wall Street.
Fermi's shares closed at $32.53 per share on Wednesday, 55% more than the initial public offering of $21 per share.
This will bring Fermi's market capitalization, or its value to the stock market, to over $19 billion. This is an astonishing number for companies that have not yet produced revenue and are not expecting until at least 2026.
“The Fermi America team is humble and pleased with the performance of today's IPOs, and is already back at work. We are supplying the next generation of grids to the next generation of AI.
Dale Klein, professor of Austin at the University of Texas and former federal regulator nuclear project, said there is a lot of excitement about AI's potentially large appetite for electricity and the lucrative opportunities for companies such as Fermi to meet that demand.
However, he warned that Fermi was only just beginning to implement its goal of bringing its first reactor online by 2032. This is a risk the company itself granted in its application to federal regulators on Wednesday.
“In the nuclear business I'm in, it has a history of overestimation and underestimation. So when you get to a compressed timeline, it tends to make you wonder,” Klein said.
Promoting the future of AI
Fermi entered the scene in June and announced an ambitious plan to build what it would be the world's largest data center campus and the country's largest nuclear power plant near Amarillo.
If that didn't get enough headlines, Fermi teased in his first application that it was an application to federal regulators, and that the four reactors on which the project is planned could be named after President Donald Trump.
Fermi is moving quickly, Perry said in a June announcement from the company. Because America is already supplying other countries “behind” to provide the enormous amount of electricity needed in races to develop AI.
“The Chinese are building 22 reactors today to promote the future of AI. There's nothing in America,” Perry said.
Meanwhile, Fermi's stock investors are betting that tech companies will pay a lot to host AI supercomputers on data center campuses that have not yet been built. Nuclears are particularly attractive because they provide continuous power sources that are generated without the emissions that cause climate change.
“We have a huge amount of money looking for a place to enter the nuclear industry,” said longtime nuclear engineer and advocate Nick Touran of Fermi's public debut. “We're not sure they can deliver the nuke, but the money they're rushing to them is a prediction. Yes, we believe in this idea.”
There is no guarantee
The question is whether Fermi can overcome the challenges that have been stalling efforts to develop nuclear projects in the United States for decades, giving the industry a reputation for cost overruns and project delays.
Fermi said many risks are moving ahead. For one, the company has no operating history, so “it's difficult to predict the outcomes that could ultimately be achieved.”
“We have not yet built any facilities and have not entered into binding contracts with tenants, and there is no guarantee that we will be able to do so in the future,” Fermi said.
Fermi reported a net loss of $6.4 million since its formation from mid-January to the end of June. The company said it does not expect to generate revenue, from the initial sublease of its data center campus to providing electricity to those customers.
As nuclear reactor construction takes years, Fermi said it is to bring 1.1 gigawatts of electricity online by the end of 2026, primarily a natural gas power plant supplemented by solar arrays. This corresponds to the electricity usage of approximately 275,000 Texas households.
“We expect at least significant costs and continued financial losses until Project Matador becomes commercially viable.
Fill the vacuum
Still, Fermi CEO Toby Neugebauer told the Houston Chronicle in June that he was confident that he could achieve his goals as he hired people who led successful nuclear projects in China and the United Arab Emirates.
Furthermore, the Westinghouse AP1000 reactor, the type of nuclear project that is planning to build Fermi, is a proven technology unlike some of the other prototypes that have generated many topics in the industry.
The challenge is that the Westinghouse AP1000 reactor was last completed in the US by Georgia Utility Southern Company in 2023. Utility customers are costly.
Georgia's “boondoguru” has made funding for nuclear megaprojects even more difficult, despite being the best time to apply lessons learned, Touran said. The industry has since tried to find ways to raise money to try again.
Fermi offered a new approach: public.
“We know at this point that the utility can't do it in the stomach, so now there's a vacuum. So how do you fund it? Here's the answer for Fermi America,” Touran said.
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