Amazon has withdrawn a $150 million construction advance from Fermi America’s ambitious 11-gigawatt data center campus in the Texas Panhandle, causing the developer’s stock to plummet nearly 50% in mid-December. Fermi America CEO Toby Neugebauer confirmed that Amazon was the unnamed tenant behind the canceled Advance in Aid of Construction Agreement (AICA), though he emphasized negotiations remain ongoing.
The massive Project Matador represents one of the most ambitious infrastructure projects designed to meet the surging energy demands of AI data centers. Fermi America plans to bring 11 gigawatts of new power online over the next decade using a mix of grid power, natural gas, and nuclear sources. The project operates on a 99-year ground lease with the Texas Tech University System.
The deal structure called for Amazon to anchor the project by taking the first gigawatt of power across 12 facilities, with payments totaling more than $20 billion over 20 years. In September, Fermi announced a nonbinding letter of intent with an investment-grade tenant, which has now been revealed as Amazon. The AICA cancellation occurred after an exclusivity period ended, with Amazon reportedly attempting last-minute pricing changes that Fermi deemed unacceptable.
Neugebauer downplayed concerns about the withdrawal, characterizing it as “just a normal negotiation” and noting Amazon’s reluctance to spend money after the exclusive period expired. “Big deals take longer,” he told Business Insider, expressing confidence the talks would continue productively.
Fermi America went public in September, pricing shares at $21 and raising over $680 million, with an initial valuation near $14 billion. The company was founded less than a year ago by Neugebauer, former Energy Secretary Rick Perry, and Perry’s son Griffin. Following the AICA cancellation news, the company’s valuation has dropped below $6 billion.
The project has attracted interest from multiple tech players. In October, Neugebauer told the Amarillo City Council that Palantir, the AI-focused software company, had expressed interest in the site. Cantor Fitzgerald analysts reported that Fermi management indicated they are “active” with two additional tenants and in dialogue with four more potential partners, suggesting the project’s viability extends beyond any single anchor tenant.
Key Quotes
The lead negotiator for Amazon called me on Thursday.
Fermi America CEO Toby Neugebauer confirmed Amazon’s identity as the tenant that withdrew funding, providing transparency about the high-stakes negotiations involving one of the world’s largest tech companies and a multi-billion dollar AI infrastructure project.
It’s just a normal negotiation. Their issue was spending money after the exclusive period had ended.
Neugebauer downplayed the significance of Amazon’s $150 million withdrawal, framing it as a routine negotiation tactic rather than a deal-breaker, though the market’s 50% stock drop suggests investors viewed it more seriously.
I just finished with Palantir, which is our nation’s tip of the spear in the AI war. They’ll be here Thursday.
Neugebauer told the Amarillo City Council in October about Palantir’s interest, explicitly connecting the data center project to AI applications and national AI competitiveness, demonstrating the project’s strategic importance beyond commercial considerations.
It’s a big deal. Big deals take longer.
The CEO expressed confidence that negotiations would continue despite the setback, acknowledging that a $20 billion, 20-year commitment for AI infrastructure requires extended deliberation and complex terms that can’t be rushed.
Our Take
Amazon’s withdrawal reveals the precarious economics of speculative AI infrastructure at unprecedented scale. While AI demand is undeniable, hyperscalers like Amazon hold enormous leverage in negotiations, able to walk away from $150 million commitments when terms don’t satisfy them. Fermi’s stock collapse—from $14 billion to under $6 billion valuation—shows how quickly investor confidence evaporates without anchor tenant certainty.
The involvement of multiple potential tenants suggests the underlying thesis remains sound: AI workloads need massive power capacity. However, the gap between demand and willingness to commit capital at specific price points is widening. Neugebauer’s public optimism contrasts sharply with market reaction, indicating skepticism about whether Fermi can secure favorable terms. This negotiation will likely set precedents for future AI infrastructure deals, determining whether developers or hyperscalers capture more value in the AI boom’s infrastructure layer.
Why This Matters
This development highlights the massive infrastructure challenges facing the AI industry’s explosive growth. Data centers powering AI models require unprecedented amounts of energy, driving billions in infrastructure investment. Amazon’s hesitation on this $20 billion commitment signals potential caution in the hyperscaler market despite AI’s continued expansion.
The story underscores the financial risks in speculative AI infrastructure development. Fermi’s 50% stock plunge demonstrates how dependent these projects are on securing anchor tenants, and how volatile the market remains. The 11-gigawatt scale of Project Matador—equivalent to powering millions of homes—illustrates the enormous energy appetite of AI computing.
For the broader AI ecosystem, this negotiation reflects the power dynamics between cloud providers and infrastructure developers. Amazon’s attempt at last-minute pricing changes and withdrawal after exclusivity suggests hyperscalers are leveraging their market position to negotiate favorable terms. The involvement of multiple potential tenants, including Palantir, indicates strong underlying demand for AI-focused data center capacity, even as individual deals face hurdles. This project’s success or failure could influence how future AI infrastructure mega-projects are structured and financed.
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Source: https://www.businessinsider.com/fermi-america-amazon-tenant-texas-data-centers-2025-12