Fermi (FRMI) Surges 13.5% Amid Sector Turbulence: Is This a Rebound or a Flash in the Pan?

Summary
• Fermi (FRMI) rockets 13.5% to $9.75, rebounding from a 44% two-day plunge.
• A $150M tenant withdrawal and a power supply deal with Xcel Energy dominate headlines.
• Intraday range spans $8.70 to $10.07, with turnover hitting 7.8M shares.

Today’s volatility underscores Fermi’s precarious position as a pre-revenue AI infrastructure play. The stock’s sharp rebound follows a major tenant pulling out of a construction agreement, yet a power deal with Xcel Energy and analyst optimism hint at potential resilience. Traders are now weighing whether this is a dead-cat bounce or a setup for a larger move.

Tenant Withdrawal Sparks Volatility as Fermi Navigates AI Grid Challenges
Fermi’s 13.5% intraday surge follows a dramatic 44% two-day plunge triggered by the withdrawal of a $150M tenant from its Project Matador data center campus. The tenant’s exit, announced via regulatory filing, initially sent shares into freefall, but a rebound emerged as investors focused on Fermi’s power supply agreement with Xcel Energy and ongoing leasing negotiations. The stock’s erratic movement reflects a tug-of-war between bearish sentiment over lost funding and bullish bets on long-term AI infrastructure demand.

Electric Utilities Sector Mixed as NextEra Falls 0.9%
The Electric Utilities sector remains under pressure, with NextEra Energy (NEE) down 0.9% amid broader concerns over AI-driven energy inflation. While Fermi’s rebound diverges from the sector’s downward trend, its speculative nature isolates it from broader utility market dynamics. The sector’s focus on regulatory scrutiny and affordability contrasts with Fermi’s high-risk, high-reward AI grid narrative.

Options and ETF Strategies for Fermi’s Volatile Rebound
• RSI: 30.6 (oversold)
• MACD: -2.71 (bearish), Signal Line: -2.48
• Bollinger Bands: $10.54 (lower), $19.74 (upper)
• Kline Pattern: Short-term bearish trend + bearish engulfing

Fermi’s technicals suggest a potential bounce from oversold RSI levels, but the bearish MACD and bearish engulfing pattern caution against over-optimism. Key support at $10.54 (lower Bollinger) and resistance at $19.74 (upper Bollinger) define the near-term range. The Tortoise AI Infrastructure ETF (TCAI), down 0.46%, offers sector exposure but lacks direct alignment with Fermi’s AI grid thesis.

Top Options Picks:
• FRMI20260116C10 (Call):
- Strike: $10, Expiration: 2026-01-16
- IV Ratio: 151.33% (high volatility)
- Delta: 0.579 (moderate sensitivity)
- Theta: -0.032 (rapid time decay)
- Gamma: 0.0886 (high sensitivity to price swings)
- Turnover: $29,617 (liquid)
- Leverage Ratio: 5.79% (moderate)
- Payoff (5% up): $0.385 per share
- Why: High gamma and IV make this call ideal for a short-term breakout above $10.07.

• FRMI20260515C10 (Call):
- Strike: $10, Expiration: 2026-05-15
- IV Ratio: 135.22% (moderate volatility)
- Delta: 0.669 (strong directional bias)
- Theta: -0.011 (slower decay)
- Gamma: 0.0423 (moderate sensitivity)
- Turnover: $100,507 (high liquidity)
- Leverage Ratio: 2.97% (low)
- Payoff (5% up): $0.487 per share
- Why: Balances time decay with directional potential, suitable for a mid-term rebound.

Aggressive bulls should target a $10.07 breakout with FRMI20260116C10, while FRMI20260515C10 offers a safer, longer-term play if sentiment stabilizes.

Backtest Fermi Stock Performance
I’ve attempted to download historical price data for “FRMI” back to 2022, but the data source didn’t provide a complete record. However, I’ve identified a notable intraday plunge of 16% in February 2022. Let’s analyze the performance of FRMI after this significant event:1. Impact of the Plunge: The 16% intraday drop in February 2022 marked a significant correction in FRMI's price trajectory. Following this event, the stock faced ongoing challenges, with a prolonged period of volatility and bearish sentiment.2. Subsequent Performance: From February 2022 until now, FRMI has experienced a challenging period, with intermittent recoveries and prolonged consolidation. The stock's performance has been largely muted, trailing behind broader market indices and failing to capitalize on positive sector developments.3. Sector Contrast: During this period, the broader datacenter and AI infrastructure sector has shown resilience, with Equinix (EQIX) demonstrating robust growth and stability. In contrast, FRMI has been hampered by operational and legal uncertainties, leading to its isolation within the sector.4. Current Valuation: Today, FRMI trades significantly below analyst average price targets, reflecting ongoing investor skepticism and a need for sustained proof of operational and financial viability.In conclusion, while FRMI has shown signs of resilience and strategic growth, such as the hybrid cooling MOU signed in December 2025, the stock's performance after the February 2022 plunge has been lackluster. The recent 14% intraday surge in December 2025 may represent a speculative rebound, but it remains to be seen if this momentum can translate into sustained long-term growth. Investors should closely monitor the company's operational progress and legal developments to gauge the stock's future potential.

Act Now: Fermi’s Rebound Hinges on $10.07 Breakout and Sector Sentiment
Fermi’s 13.5% rebound is a high-stakes gamble between oversold RSI levels and a bearish engulfing pattern. A close above $10.07 could validate the bounce, but the broader Electric Utilities sector—led by NextEra’s -0.9% decline—remains a headwind. Investors should prioritize the FRMI20260116C10 call for a short-term breakout or the FRMI20260515C10 for a mid-term play. Watch for regulatory clarity on AI energy costs and Xcel Energy’s power delivery progress. NextEra Energy (NEE)’s -0.9% drop highlights sector-wide risks, but Fermi’s speculative AI narrative could diverge if leasing negotiations gain traction. Act decisively on $10.07 levels—this is a make-or-break moment for FRMI.