CARSON COUNTY, Texas (KVII) — Fermi Inc. said Monday it has signed a $6.5 billion lease with AI cloud provider TensorWave for part of its massive data center and power campus in the Texas Panhandle, securing its first binding customer agreement after months of financial, leadership and environmental controversy.
The 15-year lease covers a data center supplied by 222 megawatts of power at Project Matador, a sprawling energy and computing development under construction in Carson County northeast of Amarillo. Fermi said the facility could eventually house tens of thousands of AMD Instinct graphics processing units used to train and operate artificial intelligence systems.
Fermi is expected to begin delivering the facility in stages during the second half of 2027. The agreement gives TensorWave rights to expand into two additional data centers, which would bring the partnership to more than 650 megawatts.
The expansion is not yet committed, and the initial lease remains subject to conditions including project financing and guarantees. Fermi said it expects some of TensorWave’s obligations to be guaranteed by an unidentified “global leader in AI,” but it did not say whether that guarantee has been signed.
“A lease of this size and this term is a tremendous vote of confidence in Fermi,” board Chairman Marius Haas said in a statement.
TensorWave, a privately held company specializing in cloud services built around AMD processors, raised $350 million in June at a reported valuation of $1.55 billion. AMD Ventures and Magnetar co-led the funding round.
Fermi said it would develop and construct the turnkey facility, with TensorWave taking occupancy in phases. The lease includes two five-year renewal options after the initial term.
The agreement represents a major milestone for a project that has attracted national attention for its scale and political connections but has also faced questions about financing, water consumption, air pollution and corporate governance.
Fermi, co-founded by former Texas Gov. and U.S. Energy Secretary Rick Perry, plans to develop as much as 17 gigawatts of power at Project Matador through natural gas, nuclear energy, solar power, batteries and connections to the electric grid. The company said about 6 gigawatts have been permitted and more than $1.5 billion has been invested.
The company has submitted federal applications for four AP1000 nuclear reactors at the site, which is next to the U.S. Department of Energy’s Pantex facility. Filings with the Nuclear Regulatory Commission formally identify the site as the President Donald J. Trump Advanced Energy and Intelligence Campus, though the company generally calls it Project Matador. The nuclear reactors have not received construction and operating licenses.
The new lease follows the collapse of an earlier prospective tenant arrangement that damaged investor confidence and raised questions about Fermi’s ability to finance construction.
In September 2025, Fermi signed a nonbinding letter of intent with what it described as an investment-grade prospective tenant. That company later agreed to provide as much as $150 million toward construction, but terminated the funding agreement in December. Fermi said no money had been drawn.
The loss contributed to a sharp decline in Fermi’s stock and prompted a shareholder lawsuit alleging the company misled investors about tenant demand and funding for Project Matador. Fermi has denied wrongdoing and said it intends to defend itself.
Fermi had not generated operating revenue as of March 31 and acknowledged in a regulatory filing that its available cash was insufficient to meet expected obligations for the following 12 months without additional financing and changes to its construction schedule. The company estimated that completing the initial phases of Project Matador could require more than $3 billion in additional capital.
Fermi raised $431.25 million through convertible notes in July. The company has said it expects to fund Project Matador through a combination of project debt, equipment financing, tenant payments, strategic investments and tax incentives.
The company has also endured a bitter leadership dispute.
Fermi’s board removed co-founder Toby Neugebauer as chief executive in April and terminated his employment for cause on April 30, citing conduct that violated his employment agreement and company policies. His removal from the board followed automatically.
Neugebauer disputed the company’s account, saying his ouster was about control of Project Matador rather than his performance. He sued to challenge his removal and launched an effort to call a special shareholder meeting and replace members of the board.
Fermi accused Neugebauer of trying to seize control of the company and said its directors acted properly. Neugebauer suspended his proxy campaign in July after a judge recused himself shortly before a scheduled hearing, though he said the underlying governance litigation would continue.
Chief Financial Officer Miles Everson also resigned in April, adding to concerns about stability at the company. Fermi later hired Robert Masson as chief financial officer.
Project Matador’s water use has generated another dispute in a region dependent on groundwater for cities, farms and ranches.
In October, the Amarillo City Council voted 4-1 to approve a proposal to sell Fermi as much as 2.5 million gallons of water per day. Fermi agreed to pay twice the rate charged to other industrial customers and would be responsible for constructing and transferring the necessary pipeline infrastructure to the city.
Councilman Les Simpson voted against the proposal, arguing the city could have charged more and that the negotiation had moved too quickly. Mayor Cole Stanley defended the agreement as beneficial to Amarillo.
Perry has sought to ease concerns about the project’s water demand. In an October interview, he said the first gigawatt would use about as much water as a single center-pivot irrigated cornfield. Fermi later told state lawmakers that its cooling and water-reuse systems would consume about 80% less water than conventional designs.
Critics have questioned those projections and warned that even efficient data centers could place additional pressure on the region’s water supply as the campus expands.
The debate prompted Amarillo leaders in May to consider a two-year moratorium on new large-scale data centers. City officials said they needed time to study the effects of the rapidly growing industry on water, electricity and municipal infrastructure.
Project Matador lies outside Amarillo’s city limits, meaning a city moratorium would not directly stop its construction. But the proposal illustrated the political resistance surrounding the project and other large data centers.
Residents and environmental groups have also objected to air permits for the large natural gas power complex planned at the site. The Texas Commission on Environmental Quality approved a major permit in February despite requests for a contested hearing. Additional generating facilities remain in the permitting process.
The project now faces a changing regulatory climate. On Aug. 3, Gov. Greg Abbott ordered state regulators to audit data centers seeking connections to the Texas grid, including their water use, infrastructure costs and effects on surrounding communities. Abbott has said data centers should pay their own infrastructure costs and avoid shifting expenses to residential customers.
Fermi has emphasized that much of Project Matador’s power would be produced behind the meter on a private grid, but the campus also anticipates using some power from the public electric system.
Fermi said it remains in talks with hyperscale cloud companies, specialized AI providers and enterprise customers about leasing additional capacity at Project Matador.