The next Bottleneck in the AI Datacenter supercycle is Energy.
Have you read the paper Situational Awareness by Leopold Aschenbrenner? He is the 24 year old AI savant. Basically he wrote a paper about what is going to happen over the next 10 years and he has been correct, making buckets of money from the likes of $MU, $SNDK, $NVDA, and more along the way. He argued that the constraints on the path to AGI would shift from algorithms and chips to physical infrastructure, and above all, to electricity!
Memory, Storage, and Computer Hardware stocks have limited upside after their 1000-3000% gains in the last 12 months. However, the next bottleneck to rapid build out of AI datacenters... is Energy!
Berkeley National Laboratory estimates US datacenter electricity consumption will grow from 176 terwatthours in 2023 to between 325 - 580 terawatthours in 2028. A tripling of energy needs in just 5 years. Hyperscalers are on track to spend more than $650 Billion in 2026 alone, and have guided to be spending more in the future.
The IEA has idenitified natural gas turbines to be the most practical solution to datacenter power build out. Fermi specifically focuses on natural gas and eventually, nuclear. PJM (largest grid in the US) will be 6 Gigawatts short of its requirements by 2027. Fermi aims to solve this, Project Matador at full buildout will deliver 11 Gigawatts of private off-the-grid power with potential for up to 17 Gigawatts. 6 Gigawatts is roughly the consumption of NYC, and the hyperscalers need this type of power ASAP.
US residential energy bills have increased 36% since 2020, and will rise another 4% in 2026. Datacenters are increasingly unpopular as they make energy expensive for local residents. Lawmakers have introduced over 300 bills against Datacenter buildout just this year, some projects have been delayed or had to move because of this.
But FERMI, which has build out project Matador, will have up to 11 GW on 7500 acres in Texas. The site itself is a 99 year lease right next to DOE's nuclear weapons facility. There is a permitting pathway to civilian nuclear usage. Rick Perry, frmr Texas Governor and frmr Secretary of Energy, is cofounder and on the Board of Fermi. Let's just say he will know how to navigate energy deals and permitting in the state of Texas.
Near Term Catalyst:
On Fermi's Q1 '26 earnings call, management laid out a 90 day execution plan with 5 deliverables: 1. Secure a bind tenant agreement (news of this would make the stock skyrocket). 2. Maintaining capital discipline. 3. Hire a permanent CEO (this would abate worries about the management team). 4. Delivering power at the site (already being done tbh). 5. Exploring strategic partnerships for accelerating datacenter and power deployment.
The tenant is the biggest item, that would de-risk Fermi and cause a fundamental re-rating closer to its original IPO open price: $25 a share.
In my opinion, this a great opportunity and a potential 10x on the FRMI Aug 21 10C, as well as 300% gain on shares. My target price of $25 is reasonable, implying a \~$16B market cap. This is low for the sole company meeting the energy needs of nearly $1 Trillion addressable market.
TLDR: FRMI gonna go to $25 on AI Capex Energy build out. Buy August 21 10Call. Positions attached.