Key Takeaways
Shares of Fermi, which is in the early stages of developing a massive data center and energy complex in the Texas Panhandle, soared on their first day of trading Wednesday.AI-related IPOs have been red hot this year, with investors piling into the stocks of buzzy companies cashing in on AI fervor. Fermi listed as a real estate investment trust, a type of company that collects rent and pays out healthy dividends, but the company doesn’t expect to have leasable property until the end of next year.

Shares of Fermi (FRMI), the developer of one of the world’s largest AI data center campuses, soared on their first day of trading Wednesday in yet another sign of Wall Street’s appetite for all things AI.

Fermi stock rose 55% on Wednesday to close at $32.53, after pricing its IPO at $21 a share. The stock was up an additional 7% in after-hours trading.

Fermi is the latest in a string of AI-related IPOs that have attracted strong interest from investors this year. The stock of design software maker Figma (FIG) skyrocketed 250% in its first day of trading in July, and shares of cloud computing provider Coreweave (CRWV) are up more than 200% since their March debut. 

Why This Matters To You

The success of Fermi’s IPO suggests Wall Street’s demand for AI-related stocks remains strong after nearly three years of AI-driven stock gains. But some market watchers warn that feverish investment in companies without any revenue is often a sign a bubble is forming.

Fermi is an unconventional stock in several respects. First, it has no revenue. The company was founded in January and is in the early stages of developing the President Donald J. Trump Advanced Energy and Intelligence Campus, a huge data center facility situated on a 5,000-acre site in the Texas Panhandle. The plan is to build 15 million square feet of data center capacity—equivalent to about 260 football fields—that’s hooked up to 11 GW of natural gas, nuclear, and solar power. Fermi expects to break ground on its first data centers next March, and hopes to have 1.1 GW of power available to tenants by the end of next year. 

Fermi’s listing as a real estate investment trust (REIT) also sets it apart from nearly every other AI investment. REITs are required to disburse 90% of their profit to investors, which isn’t exactly conducive to funding the kind of explosive growth that most investors have come to expect from AI-related businesses. It will also likely be a while before Fermi can pay a dividend, considering it doesn’t expect to have data centers available for lease before the end of next year.

Fermi’s single-site portfolio is also highly unusual; most REITs, including competing data center landlords Digital Realty (DLR) and Equinix (EQIX), tout vast property portfolios that offer investors the benefits of diversification.  Fermi’s planned campus may be enormous, but it’s still only one property.