Investors Sue Fermi Inc. Over Alleged AI Campus Funding Fraud

2026-01-09 companies

San Diego, Friday, 9 January 2026.
Fermi shares plummeted 59% from their IPO price after the termination of a critical $150 million funding agreement, triggering a class action lawsuit alleging the company misled investors about AI campus demand.

Legal Action Following Disclosed Funding Failures

On Friday, January 9, 2026, Robbins Geller Rudman & Dowd LLP announced the filing of a class action lawsuit against Fermi Inc. (NASDAQ: FRMI), formally identified as Lupia v. Fermi Inc., No. 26-cv-00050, in the Southern District of New York [1]. The complaint alleges that the energy and AI infrastructure company violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by making materially false and misleading statements regarding the viability of its flagship development, Project Matador [1][2]. Specifically, the lawsuit claims that Fermi executives overstated tenant demand for the campus and failed to disclose that the project’s construction financing was critically dependent on a single tenant’s funding commitment [3][6]. These allegations suggest that the company’s portrayal of its financial stability and market interest was artificially inflated during its initial public offering (IPO) in October 2025 [2][5].

The Collapse of the ‘First Tenant’ Agreement

The catalyst for the legal action dates back to a disclosure made by the company on December 12, 2025 [1]. Fermi revealed that its prospective anchor partner, referred to as the “First Tenant,” had notified the company on December 11 that it was terminating an “Advance in Aid of Construction Agreement” [4][5]. This agreement was set to provide Fermi with up to $150 million to fund construction costs for Project Matador [4]. According to the disclosure, the termination occurred because the exclusivity period outlined in the letter of intent had expired [4]. This sudden withdrawal of capital directly contradicted the company’s previous assurances regarding secured tenant demand and funding stability for the AI infrastructure project [2][5].

IPO Valuation and Subsequent Market Crash

The financial impact on shareholders has been severe, particularly given the recency of Fermi’s public debut. The company completed its IPO in October 2025, selling 37,375,000 shares at a price of $21.00 per share, raising approximately $784 million in gross proceeds [1][5]. However, following the December 12 disclosure regarding the lost funding, Fermi’s stock price closed at $10.09, representing a single-day decline of nearly 34% [3][5]. The downward trajectory continued, with the stock trading as low as $8.59 per share [1]. This represents a total decline of -59.095% from the initial offering price, causing substantial losses for early investors [1].

Project Matador and Investor Deadlines

Project Matador, the focal point of the controversy, is an ambitious development based in Amarillo, Texas, styled as the world’s largest private energy campus dedicated to AI data centers [3]. The project, which involves a campus at Texas Tech University, was pitched to investors as a multi-gigawatt facility designed to power artificial intelligence workloads [5]. The lawsuit contends that the company’s inability to secure the necessary tenant commitment for this massive undertaking was a known risk that was obfuscated from shareholders [3]. Investors who purchased Fermi securities between October 1, 2025, and December 11, 2025, face a strict deadline of March 6, 2026, to file motions to be appointed as lead plaintiff in the class action [1][7]. Multiple law firms, including Berger Montague and Bleichmar Fonti & Auld LLP, are currently investigating claims and organizing investor participation [3][4].

Sources

Artificial Intelligence Securities Litigation