Fermi stock jumped Tuesday after Advanced Micro Devices agreed to help the artificial intelligence infrastructure developer secure financing for a planned data center, though analysts cautioned that hurdles remain.

Shares of Fermi rose 20% to $3.90, which is good news for a stock that has declined 51% this year and is pacing toward its worst annual performance on record, according to Dow Jones Market Data. AMD added 0.7% Tuesday.

The company announced two agreements with AMD aimed at advancing its Project Matador, Fermi's flagship data center development in Amarillo, Texas. AMD agreed to provide financial backing for Fermi's existing lease with AI cloud provider TensorWave, while AMD and Fermi also established a framework to nearly triple the project's power capacity to as much as 650 megawatts.

Evercore ISI analysts called the financing agreement a "long-awaited" deal for Fermi in a note on Tuesday, saying it marks progress toward securing funding for Project Matador. They cautioned that financing remains outstanding, however, and further expansion would depend on AMD attracting additional customers.

"While the announcement represents progress toward making the project financeable, project financing still needs to be secured," the analysts wrote.

The analysts said further details about the financial terms of the TensorWave lease -- expected to generate $6.5 billion in revenue over 15 years -- are needed to determine whether the agreement warrants higher earnings estimates or a richer valuation for Fermi.

Texas Capital Securities analysts were more bullish on the news. AMD's involvement lends credibility to Project Matador and provides a clearer pat toward financing future expansion, analysts said.

Texas Capital reiterated its Buy rating on Fermi shares and a $20 price target, representing 515% upside from the stock's closing price of $3.25 on Monday, noting its financial model doesn't yet reflect the AMD announcement.