The U.S. Data-Center Infrastructure Boom and the Strategic Case for Fermi REIT

The U.S. data-center infrastructure sector is undergoing a seismic transformation, driven by the insatiable demand for artificial intelligence (AI) computing power. Annualized spending on AI-related data-center construction has surged to $31.5 billion in 2025, with the development pipeline expanding to nearly 50 million square feet by year-end, according to Newmark. This growth is not merely a function of technological optimism but a response to structural shifts in global computing demand. Hyperscale operators and AI startups alike are racing to secure infrastructure capable of handling the energy-intensive workloads of large language models and generative AI systems. Yet, the sector faces a critical bottleneck: a 50% gap between projected power demand and available utility supply, Newmark found.

In this context, Fermi REIT, a Texas-based real estate investment trust (REIT) co-founded by former U.S. Energy Secretary Rick Perry, has emerged as a bold, if controversial, player. The company's flagship project, "Project Matador," aims to build the world's largest integrated energy-and-data complex in Amarillo, Texas. Spanning 5,200+ acres, the campus will combine nuclear reactors, natural gas turbines, solar farms, and battery storage to deliver up to 11 gigawatts (GW) of power by 2038, according to a TS2 analysis. This "HyperRedundant™" model seeks to address the sector's power constraints by generating electricity on-site, bypassing the limitations of traditional grid infrastructure, according to an AlphaSense primer.

A Market in Turmoil, but with Clear Tailwinds

The data-center market's fundamentals are robust. Primary market supply in North America reached 8,155 megawatts (MW) in H1 2025, a 43.4% year-over-year increase, while vacancy rates have collapsed to 1.6%, the lowest on record, according to a CBRE report. Pricing trends reflect this scarcity: average asking rates for 250-to-500-kW requirements rose 2.5% since H2 2024 (the CBRE report shows). Northern Virginia, the sector's traditional epicenter, accounts for 80% of the U.S. under-construction capacity (CBRE also highlights this concentration). However, the industry's reliance on regional grids is becoming a liability. As a Deloitte analysis notes, 72% of executives in the power and utilities sector identify grid capacity as a "very or extremely challenging" issue for data-center development.

Fermi's strategy is to exploit this gap. By integrating power generation with data-center infrastructure, the REIT aims to create a vertically integrated solution for AI tenants. Its Amarillo campus, for instance, will feature four modular nuclear reactors from Westinghouse, alongside natural gas and solar, to ensure a stable, high-capacity power supply, according to Complete AI Training. This approach aligns with broader industry trends. The global AI data-center market is projected to grow at a compound annual rate of 28.3% from 2025 to 2030, reaching $60.49 billion by 2030, according to Grand View Research. North America, already the largest market with a 36.6% share in 2024, is expected to remain the dominant growth engine (Grand View Research provides these regional details).

Fermi's Ambition and the Risks of Execution

Fermi's IPO, filed in September 2025, targets a $13.16 billion valuation, with proceeds intended to fund the first phase of Project Matador, the TS2 analysis reports. The company has already secured $350 million in pre-IPO financing, including a $100 million equity round and a $250 million credit facility led by Macquarie Group, per that same reporting. However, Fermi remains a pre-revenue entity with a $6.4 million loss since inception. Its business model hinges on securing long-term leases with AI developers and cloud firms, though no customers have been signed yet.

The risks are substantial. Regulatory delays for nuclear permits, supply chain bottlenecks for equipment, and the sheer scale of the Amarillo project could derail timelines. As Renaissance Capital's Matt Kennedy observes, "AI is arguably the investment story of a lifetime, but at this stage, Fermi is still a story," as reported by Yahoo Finance. The REIT's dual listing on Nasdaq and the London Stock Exchange under the ticker "FRMI" reflects its ambition to attract global capital, but also underscores the speculative nature of its valuation, according to the earlier TS2 analysis.

Strategic Considerations for Investors

For investors, Fermi represents a high-risk, high-reward proposition. The company's success depends on three key factors:
1. Execution of Project Matador: Delivering 1 GW of capacity by 2026 is critical to validating the model. Delays could erode credibility and investor confidence.
2. Tenant Acquisition: Securing anchor tenants-such as AI startups or cloud providers-will determine whether the campus generates revenue. Fermi's "advanced discussions" with potential clients are promising but unproven, the TS2 coverage notes.
3. Regulatory and Environmental Hurdles: Nuclear licensing and environmental approvals are complex and time-consuming. A setback here could delay the project indefinitely.

Yet, the long-term potential is undeniable. If Fermi succeeds, it could become a cornerstone of the AI infrastructure ecosystem, leveraging its unique power generation capabilities to command premium rents. The REIT's dual-listing strategy and partnerships with institutions like Texas Tech University and Westinghouse add credibility to its vision, the TS2 analysis also argues.

Conclusion

The U.S. data-center boom is a defining trend of the AI era, driven by insatiable demand and constrained supply. Fermi REIT's ambitious vision for Project Matador addresses a critical bottleneck-power availability-while aligning with the sector's long-term trajectory. However, its success is far from guaranteed. Investors must weigh the company's innovative model against its execution risks, regulatory challenges, and the speculative nature of its valuation. For those with a high-risk tolerance and a long-term horizon, Fermi could offer a unique opportunity to participate in the infrastructure underpinning the next wave of technological progress.