Fermi, a data center real estate investment trust (REIT) co-founded by former U.S. Energy Secretary Rick Perry, is aiming for a $13.16 billion valuation through its initial public offering (IPO) in the United States. The company, based in Amarillo, Texas, plans to raise up to $550 million by offering 25 million shares priced between $18 and $22 each. The IPO reflects the growing importance of data centers amid increasing demand from technology firms for infrastructure capable of supporting advanced artificial intelligence development.
Strategic Vision and Infrastructure
Fermi’s flagship project, the “HyperGrid,” aims to integrate energy generation with data center infrastructure. The Amarillo campus is designed to deliver 11 gigawatts (GW) of power through a mix of natural gas, solar, battery storage, and advanced nuclear reactors. Half of this capacity is expected to come from nuclear sources by 2026, addressing power scarcity and grid constraints in the data center sector.
Market Context and Valuation Considerations
The data center REIT sector has experienced unprecedented momentum in 2025. According to a report by CBRE, North American primary market vacancy rates for data centers plummeted to 1.6% in the first half of 2025, despite a record 8,155 megawatts (MW) of new supply. This scarcity has driven pricing pressures, particularly for large deployments.
Fermi’s $13 billion valuation target must be contextualized against the sector’s top performers. As of the third quarter of 2025, Digital Realty (DLR) boasted a market capitalization of $59.91 billion, while Equinix (EQIX) commanded a $78.612 billion market cap. These valuations reflect their dominance in global infrastructure, extensive tenant diversification, and recurring revenue models.
Challenges and Risks
Despite its strategic advantages, Fermi’s IPO faces hurdles. The data center sector’s low implied capitalization rates suggest aggressive investor expectations, which could pressure Fermi to deliver rapid returns. Additionally, the company’s reliance on advanced nuclear technology introduces regulatory and technical risks. Delays in reactor deployment or cost overruns could undermine its 2026 timeline.
Moreover, the IPO’s success hinges on macroeconomic conditions. Rising interest rates and inflation could dampen investor appetite for high-growth REITs, particularly those with capital-intensive projects. Fermi’s $550 million IPO raise, while modest compared to sector peers, will need to demonstrate clear pathways to profitability to justify its valuation.
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