Fermi (FRMI) Plunges 10.4% Amid Legal Scrutiny and Tenant Exit – Is the AI Campus Developer a Buy or Sell?

Summary
• Fermi (FRMI) crashes 10.4% intraday to $8.725, hitting a 52-week low of $8.665
• Legal investigations and a $150M tenant lease termination trigger investor panic
• Options chain shows extreme volatility, with 157.62% implied volatility on key puts
• Turnover surges to 4.8M shares, signaling heightened short-term trading activity

Fermi’s stock is in freefall as legal scrutiny intensifies and a major tenant pulls out of a $150M lease agreement. The stock’s 10.4% intraday drop to $8.725—its lowest since December 2025—has triggered a wave of panic selling. With the company now trading near its 52-week low and facing multiple lawsuits, investors are scrambling to assess whether this is a short-term correction or a deeper crisis. The options market reflects extreme volatility, with deep out-of-the-money puts surging in volume, hinting at bearish bets on further declines.

Tenant Exit and Legal Scrutiny Trigger Sell-Off
Fermi’s collapse stems from two critical catalysts: a major tenant terminating a $150M lease agreement tied to its Texas AI campus and ongoing legal investigations. The tenant’s exit, announced last week, shattered investor confidence in the company’s ability to secure long-term contracts for its data center projects. Compounding the issue, the Schall Law Firm is investigating potential securities law violations, citing a Bloomberg article that highlighted Fermi’s 46% plunge following the lease termination. The company’s recent quarterly loss of $0.84 EPS and its ambitious but unproven 11 GW power delivery plan for AI workloads further eroded credibility. With no immediate replacement for the lost tenant and legal risks mounting, the stock has become a pariah in the AI sector.

IT Outsourcing Sector Gains Momentum as Fermi Falters
While Fermi’s AI campus development struggles, the broader IT outsourcing sector is booming. Market reports project the IT Services Outsourcing Market to grow at a 9.1% CAGR through 2032, driven by demand for cloud infrastructure and AI management. Sector leader Equinix (EQIX) is down 1.88% intraday, reflecting broader market jitters, but its long-term fundamentals remain intact. In contrast, Fermi’s reliance on a single tenant and unproven power infrastructure leaves it vulnerable to further declines. The sector’s growth trajectory highlights Fermi’s misalignment with current trends, as investors favor established players with diversified revenue streams.

Bearish Options and ETF Alternatives for FRMI’s Freefall
• RSI: 36.30 (oversold)
• MACD: -2.85 (bearish), Signal Line: -2.55, Histogram: -0.296
• Bollinger Bands: Upper $19.65, Middle $14.71, Lower $9.77 (price near lower band)
• 30D MA: $17.35 (price below trend)

Fermi’s technicals paint a dire picture. The stock is trading near its 52-week low and below all major moving averages, with RSI in oversold territory but no immediate reversal signs. The options market reflects extreme bearish sentiment, with deep out-of-the-money puts surging in volume. Two top options for short-term bearish exposure are:

• FRMI20260220P10 (Put, $10 strike, Feb 2026 expiry):
- IV: 157.62% (extreme volatility)
- Delta: -0.4446 (moderate sensitivity to price moves)
- Theta: -0.0131 (moderate time decay)
- Gamma: 0.0677 (high sensitivity to gamma)
- Turnover: 4,636 (high liquidity)
- Leverage Ratio: 2.81%
- Price Change Ratio: +6.90%
This put option offers high leverage and liquidity, ideal for capitalizing on further declines. A 5% downside to $8.29 would yield a payoff of $1.71 per contract, assuming the stock closes below $10 at expiry.

• FRMI20260515P7.5 (Put, $7.5 strike, May 2026 expiry):
- IV: 151.45% (extreme volatility)
- Delta: -0.2558 (moderate sensitivity)
- Theta: -0.0078 (low time decay)
- Gamma: 0.0381 (moderate sensitivity)
- Turnover: 19,962 (very high liquidity)
- Leverage Ratio: 3.67%
- Price Change Ratio: +5.33%
This longer-dated put offers more time for the stock to decline, with high liquidity and moderate delta. A 5% downside would yield a $1.23 payoff per contract.

Aggressive bears should prioritize FRMI20260220P10 for immediate exposure, while FRMI20260515P7.5 suits a more patient bearish stance.

Backtest Fermi Stock Performance
The performance of Fermi Inc. (NASDAQ:FRMI) after an intraday plunge of -10% in 2022 can be summarized as follows:1. December 2025: FRMI's stock hit a new 52-week low, trading as low as $8.30, which is a significant drop from its 52-week high of $36.99. Despite this, the average rating from analysts is "Buy" with a target price of $31.56, suggesting a potential upside from the current price level.2. Market Reaction to News: After hitting a new low, FRMI's stock rebounded slightly to $9.25, indicating a partial recovery but still trading below its 50-day moving average of $21.13.3. Financial Performance: FRMI reported a quarterly loss of ($0.84) EPS, which could be a concern for investors looking for profitability. However, the company's strategic focus on low-carbon power for AI workloads and plans to deliver up to 11 GW of capacity by 2026 could be a positive long-term outlook.4. Recent Developments: The stock's performance has been influenced by operational disruptions and regulatory challenges, including pilot shortages and new FDTL norms that have led to widespread cancellations and a bearish outlook from Investec with a Sell rating.In conclusion, while FRMI has experienced a significant drop of -10% intraday in 2022, the consensus among analysts is positive with a "Buy" rating and a target price above the current trading level. However, the stock's recent performance indicates volatility, and investors should consider the company's strategic direction and potential risks before making investment decisions.

Fermi’s Freefall Continues – Watch for Legal Risks and Sector Rotation
Fermi’s 10.4% intraday plunge underscores the fragility of its business model amid legal scrutiny and tenant losses. With the stock near its 52-week low and no clear path to recovery, investors should treat this as a high-risk trade. The options market’s extreme volatility and bearish positioning suggest further declines are likely unless the company secures new contracts or resolves legal issues. Meanwhile, sector leader Equinix (EQIX) is down 1.88%, reflecting broader market caution but offering a more stable alternative. Act now: Short FRMI via deep out-of-the-money puts or pivot to IT outsourcing ETFs as the sector gains momentum.