Fermi (FRMI -10.79%) reported Q2 results this morning, and investors didn't like what they saw. The Texan real estate investor and private energy grid operator celebrated a 15-year anchor customer, delivery of key infrastructure components, and nearly $417 million of debt-based financing in the second quarter. But Fermi fell short on one crucial metric when it reported zero revenues again.
NASDAQ: FRMI
Key Data Points
Zero is a lonely number
The company describes itself as a pre-revenue business, and the Q2 income statement didn't even have a line for sales. That's not a disaster in the context of three earlier revenue-less reports, but Wall Street expected better. Consensus top-line estimates range from $72 million to $148 million, depending on whose analyst polls you prefer.
Management expects to bring online the first 200 megawatts at its Project Matador site over the next six months, with revenue to follow as computing clients complete and populate their data centers. For now, Fermi runs massive construction projects with no proven revenue to show for it.
Image source: Getty Images.
A speculative AI play with a lot to prove
In the bigger picture, Fermi remains an interesting but unproven alternative investment in the AI boom. The company aims to provide 8,400 acres of real estate and 1.5 gigawatts of electric power to AI hyperscalers over the next two years. However, the revenues remain hypothetical, while the cash burn is intense. As for Fermi's stock, it's down 23% in six months and 79% over the last year.
If Fermi delivers on its promises, it could become an AI powerhouse in the long run. Shares are trading at a modest 8.9 times forward earnings projections according to Finviz and 6.9 times forward earnings projections at Morningstar. However, the company has a lot to prove and a $4.3 billion market cap to defend. I see more downside than upside in this volatile stock.
