Fermi (FRMI) Surges 11.87% Amid Legal Scrutiny and Analyst Optimism – What’s Fueling the Rally?

Summary
• Fermi (FRMI) surges 11.87% intraday to $9.61, rebounding from a 14.87% prior close.
• Intraday high hits $10.0676, while the 52-week low of $8.30 looms as a critical support.
• Turnover spikes to 7.48M shares, with a 3.26% turnover rate signaling heightened short-term interest.
• Analysts remain split: Evercore ISI reaffirms a $20 Buy rating, while DCF models suggest overvaluation at $5.66.
• Legal investigations and a terminated $150M tenant agreement cast shadows over the AI infrastructure play’s long-term viability.

Legal Uncertainty and Analyst Optimism Drive Volatility
Fermi’s 11.87% intraday rebound follows a four-day losing streak triggered by the withdrawal of a $150M tenant agreement for its Texas data center campus. While the company cited ongoing discussions with alternative tenants and a power supply deal with Xcel Energy, legal scrutiny from Bragar Eagel & Squire has intensified, with claims of potential securities law violations. Meanwhile, Evercore ISI’s $20 Buy rating and Macquarie’s $35 target highlight divergent views on FRMI’s AI infrastructure potential. The stock’s sharp move reflects a tug-of-war between bearish fundamentals (DCF fair value of $5.66) and bullish analyst optimism, amplified by high turnover and a bearish K-line pattern (short-term bearish trend + 看跌吞没).

Data Processing Sector Sinks as Equinix (EQIX) Dips 0.36%
The Data Processing & Outsourced Services sector underperformed, with sector leader Equinix (EQIX) down 0.36% despite Fermi’s rebound. This divergence underscores FRMI’s unique exposure to legal and execution risks, contrasting with the sector’s broader focus on stable infrastructure. While EQIX’s decline reflects macroeconomic concerns, FRMI’s volatility is driven by project-specific setbacks and speculative trading.

Options Playbook: Capitalizing on FRMI’s Volatility with Leverage and Hedging
• RSI: 30.61 (oversold)
• MACD: -2.71 (bearish), Signal Line: -2.48, Histogram: -0.23
• Bollinger Bands: Upper $19.74, Middle $15.14, Lower $10.54 (current price near lower band)
• K-line Pattern: Short-term bearish trend + 看跌吞没 (bearish reversal)
• Leveraged ETFs: Tortoise AI Infrastructure ETF (TCAI) down 0.91%, VanEck Onchain Economy ETF (NODE) up 0.19%

FRMI’s technicals suggest a short-term bounce from oversold RSI and Bollinger Band support, but the bearish MACD and K-line pattern warn of potential follow-through selling. For aggressive bulls, FRMI20260116C10 (call) offers 5.71% leverage and 158.42% implied volatility, with a 44.63% price change ratio. A 5% upside to $10.09 would yield a payoff of $0.09 per share. For hedging, FRMI20260116P10 (put) provides 4.22% leverage and 189.29% IV, with a -16.67% price change ratio. A 5% downside to $9.13 would yield $0.87 per share. Both contracts exhibit high liquidity (turnover $25k–$83k) and favorable theta/gamma profiles. Aggressive bulls may consider FRMI20260116C10 into a bounce above $10.50, while cautious investors should monitor the $8.70 intraday low for a breakdown signal.

Backtest Fermi Stock Performance
Fermi Inc. (FRMI) has shown significant growth from 2022 to the present, with a notable intraday surge of 12% on December 5, 2025. Here's a detailed analysis of its performance:1. Intraday Surge on December 5, 2025: Fermi's stock price increased by 11.1%, reaching an intraday high of $16.66 and closing at $16.29. This surge was accompanied by heavy trading volume, with approximately 2.04 million shares traded, which is significantly below its average daily volume.2. Recent Analyst Coverage: Fermi has been the subject of positive analyst attention, with Evercore ISI initiating coverage on October 27, 2025, and assigning an Outperform rating and a price target of $37.00. This suggests that the company's potential for growth is recognized by the analyst community.3. Market Sentiment and Performance: Despite the recent positive performance, Fermi's stock has experienced volatility, with a decline of 4.6% on December 4, 2025. However, the stock's trajectory appears to be on an upward trend, as evidenced by its 61.08% year-to-date return and strong trailing returns of 61.08% over the past three, five, and twelve months compared to the S&P 500's returns.4. Financial Position: Fermi's financial position is robust, with a market capitalization of $5.27 billion and an enterprise value of $5.32 billion as of December 15, 2025. The company's trailing P/E ratio and forward P/E ratio indicate that the stock is currently trading at a premium compared to its earnings.5. Strategic Positioning: Fermi's mission to power the AI needs of tomorrow positions it well in the growing AI and datacenter power ecosystem. The company's strong debut and subsequent momentum in the market reflect growing investor interest and confidence in its future prospects.In conclusion, Fermi's performance after the 12% intraday surge on December 5, 2025, has been impressive, with the stock showing strong trading activity and positive analyst sentiment. While the stock has experienced some volatility, its strategic positioning and robust financial position suggest that it could continue to perform well in the future.

Act Now: FRMI’s Legal Risks vs. Analyst Hype – What to Watch Before the January 16 Expiry
Fermi’s 11.87% rebound is a short-term bounce in a bearish trend, driven by speculative options activity and analyst optimism rather than fundamental strength. The stock faces critical junctures: a legal investigation could trigger further sell-offs, while a $10.50 retest of Bollinger Band support may attract buyers. Sector leader Equinix (EQIX) down 0.36% highlights broader market caution. Investors should prioritize FRMI20260116C10 for upside potential or FRMI20260116P10 for downside protection, with a close eye on the $8.70 intraday low. If the $10.50 level holds, FRMI could test $11.50; a breakdown below $8.70 would validate the bearish K-line pattern. Watch for regulatory updates and January 16 expiry dynamics to dictate next steps.