Fermi Plunges 35% on Intraday: A $150M Agreement Collapse Sparks Sector-Wide Jitters

Summary
• Fermi (FRMI) slumps 35.38% to $9.855, erasing $5.4B in market cap
• Intraday range spans $8.30 to $10.88 amid $60.26M turnover
• 52-week low of $8.30 now within 10% of current price
• Sector peers like Nextera Energy (NEE) rally 0.44% as AI infrastructure ETFs TCAI (-5.13%) and NODE (-4.41%) crumble

Fermi’s freefall has ignited a firestorm in the AI power sector, with investors scrambling to reassess the viability of speculative energy plays. The stock’s 46% intra-day selloff—its worst on record—follows the termination of a $150M funding agreement for its Texas AI campus. As the company battles liquidity concerns and a -12.85x dynamic P/E, traders are pivoting to options and leveraged ETFs to hedge or capitalize on the volatility.

Tenant Exit Shatters Fermi’s AI-Powered Illusion
Fermi’s 35% collapse stems from the abrupt termination of a $150M construction funding agreement with its first investment-grade tenant. The deal, which would have provided critical capital for its Project Matador AI campus, was scrapped after the tenant demanded last-minute pricing concessions Fermi deemed unacceptable. With no funds drawn under the agreement and the 52-week low now within reach, the move has amplified fears of a broader AI power bubble. Cantor Fitzgerald analyst Derek Soderberg notes the termination 'adds to cracks in the hype' surrounding speculative energy projects, while Stifel calls it a 'short-term negative' for a company already reporting -$37.78M EBITDA.

Electric Utilities Sector Splits as AI Infrastructure ETFs Crater
While Nextera Energy (NEE) rose 0.44%, the Electric Utilities sector faces a bifurcation as AI infrastructure plays falter. Leveraged ETFs like Tortoise AI Infrastructure (TCAI) and VanEck Onchain Economy (NODE) plummeted 5.13% and 4.41%, respectively, reflecting investor skepticism toward speculative energy projects. Fermi’s 35% drop outperformed the broader sector’s mixed performance, underscoring the unique risks of unproven AI power developers.

Options and ETFs to Hedge the AI Power Sector’s Volatility
• 52W High: $36.99 (183% above current price)
• 52W Low: $8.30 (now 10% from current price)
• MACD: -2.06 (bearish divergence from signal line -2.43)
• RSI: 49.17 (neutral but trending downward)
• Bollinger Bands: $13.35–$18.64 (current price at 42% below upper band)
• 30D MA: $19.12 (current price at 43% below)

Fermi’s technicals paint a dire picture, with the stock trading near its 52-week low and MACD histogram shrinking as bearish momentum wanes. The 30D MA at $19.12 remains a distant target, while RSI neutrality suggests oversold conditions may not yet trigger a rebound. Leveraged ETFs like TCAI (-5.13%) and NODE (-4.41%) offer inverse exposure but lack liquidity for aggressive plays.

Top Options Picks:
• FRMI20251219P10 (Put):
- Strike: $10 | Expiry: 2025-12-19 | IV: 155.05% | Delta: -0.494 | Theta: -0.0256 | Gamma: 0.178 | Turnover: $291K
- High leverage (9.57%) and gamma (0.178) suggest strong sensitivity to price swings
- Projected 5% downside (to $9.36) yields $0.64 payoff per contract
- Ideal for short-term bearish bets with moderate time decay
• FRMI20260116P10 (Put):
- Strike: $10 | Expiry: 2026-01-16 | IV: 172.15% | Delta: -0.408 | Theta: -0.0214 | Gamma: 0.0735 | Turnover: $124K
- Lower delta (-0.408) balances IV (172.15%) for a more conservative bearish play
- Projected 5% downside yields $0.64 payoff per contract
- Longer expiry (Jan 2026) offers time for further deterioration

Aggressive short-sellers should prioritize FRMI20251219P10 for its high gamma and leverage, while FRMI20260116P10 suits those expecting a prolonged bearish trend. Both contracts offer compelling risk/reward profiles given Fermi’s liquidity crisis and sector-wide skepticism.

Backtest Fermi Stock Performance
Fermi's (FRMI) stock performance has been volatile since the 2022 peak, with a recent 35% intraday plunge on December 12, 2025. Here's a backtest of its performance:1. 2022 Peak to 2023 Volatility: After reaching a high in 2022, FRMI's stock experienced significant volatility in 2023, with a notable decline by the end of the year.2. 2024 Decline Continues: In 2024, the downward trend continued, with FRMI's stock facing pressure throughout the year.3. 2025 Plunge and Recovery Attempts: In 2025, FRMI hit a 52-week low in Q1, and the stock price recovered slightly in the middle of the year before facing another decline. The recent 35% drop on December 12, 2025, marks a significant challenge for the company's stock value.4. Market Sentiment and Sector Impact: The termination of a $150M construction funding agreement in 2025 has been a critical factor in the stock's decline, sparking broader market skepticism about AI-driven energy ventures. Despite partnerships like the hybrid cooling MOU signed in December 2025, the market remains cautious about FRMI's long-term contract viability and cash flow stability.

Fermi’s $10 Support Test: A Make-or-Break Threshold for AI Power Hype
Fermi’s survival hinges on its ability to secure new tenants for Project Matador before its $10 support level (lower Bollinger Band) collapses. With the 52-week low at $8.30 looming and a -12.85x P/E signaling distress, the stock faces existential risks. Traders should monitor the $10 level closely—breaking below it could trigger a cascade to $8.30. Meanwhile, sector leader Nextera Energy (NEE) rising 0.44% highlights the divergence between proven utilities and speculative AI plays. For now, the FRMI20251219P10 put offers the most direct route to capitalize on Fermi’s unraveling narrative. Watch for a $10 breakdown or regulatory reaction to determine the next move.