Wall Street is growing skeptical of the data center boom

The backlash against data centers that is shaping elections and kitchen table debates across the country is now spilling onto Wall Street.

Companies that house the data centers or supply them with energy and land for construction were expected to dominate the initial public offering market over the coming months, feeding investors’ seemingly insatiable appetite for everything related to artificial intelligence.

But some investors are voicing increasing skepticism about the growth expectations for data centers and the risks associated with their build-out, forcing industry executives and their advisers to recalibrate their plans to raise tens of billions of dollars in public markets.

SB Energy, a subsidiary of Japanese conglomerate SoftBank, which has proposed to build the largest data center project in the world in Ohio, had originally planned its IPO for this month.

But the offering has been delayed as investors question the company’s sought-after valuation of $50 billion or more, according to interviews with four people familiar with the deal’s marketing efforts. So far, bankers have struggled to find enough buyers of SB Energy stock within price ranges the company and its bankers had sought.

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SB Energy’s struggles to win over investors come as Holtec, a company serving the nuclear energy industry that is looking to supply power for AI, said last week that it was pausing its IPO plans indefinitely, citing several factors that have “impaired investor confidence in the market for new public offerings.”

Holtec pointed to the “uncertainty of data center development” as the primary reason for the postponement, according to a company release.

Holtec Nuclear owns and operates one main nuclear power site and builds small nuclear reactors that can be used to power data centers. The company, which had planned to start trading on Nasdaq last week, was seeking to raise as much as $900 million at a valuation of up to $10 billion.

Another company that’s slowed the timing of its offering, according to three people briefed on the matter, is power company Aggreko, which counts AI data centers among its key customers. Aggreko also provides power to live events and mining projects, but it had highlighted data center clients as the basis for a large jump in revenue over the past year.

While the company may still go public in the next month, it has slowed down its process not only because of challenges facing data centers but also rising interest rates and broader economic uncertainty.

The delays are a rare hiccup for the AI industry, which has enjoyed almost unbridled investor enthusiasm in recent years.

Public opposition to data centers has built for months as communities push back against these sprawling, power-guzzling facilities that have sprung up across the country, particularly in rural areas.

Heading into the midterm elections, data centers present an unusual issue that many voters from both parties oppose. They have become a focal point for the public’s angst about an economy dominated by artificial intelligence.

Over the past week, fears over artificial intelligence hit a fever pitch as AI executives warned of the technology’s dangers and suggested slowing down the pace of development.

Some states have taken their own steps to curtail data center development, creating roadblocks for companies looking to raise money from public investors.

Despite investors’ recent caution, the demand for the computing power that these facilities provide remains enormous, and some bankers say this rocky period for some offerings is only a momentary blip. Firms including PIMCO have estimated that more than $5 trillion in spending will be needed by 2030 in order to build the infrastructure for the AI boom.

And one of the most highly anticipated IPOs of the year, Anthropic, an AI lab that uses huge amounts of data center capacity, is still on target for this fall.

There are only two publicly traded companies that focus solely on building data centers, Equinix and Digital Realty Trust, and their share prices have fallen between 1% and 2% this month.

Data center companies had been expected to account for roughly one-third of all listings for the remainder of 2026, according to interviews with a dozen bankers, lawyers and investors.

Meta, Alphabet, Amazon, Microsoft and Oracle have already committed to spending more than $1 trillion for their own infrastructure plans.

Many investors say data center developers will inevitably need the stock market to complete this build-out.

“The scope of what they’re embarking on is just enormous, and so they need to tap all the major capital markets,” said Tomasz Tunguz, a venture capital investor at Theory Ventures who invests in data centers.

Among the data center companies seeking to go public, there’s a wide dispersion of operating track record and history and customer concentration.

Many projects are in the early stages, leaving the companies vulnerable to execution risks. Investors say that is one of the risks giving them pause about SB Energy.

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SB Energy has agreed to build, own and operate a data center in Ohio that will be leased to OpenAI and is backed by Nvidia. Its CEO, Jensen Huang, recently said that Nvidia would backstop OpenAI’s leases and spend as much as $105 billion to do so.

While SB Energy is developing some smaller data centers, it has yet to put one into operation. Despite its thin track record, the company projects a revenue backlog of $439 billion that it will receive over roughly 20 years beginning in 2028, mostly from the Ohio data center.

Last week, SB Energy tried to win over investors by hosting a call with OpenAI’s chief financial officer, Sarah Friar, and its head of infrastructure, Sachin Katti, who discussed the merits of the Ohio data center.

Some investors said SB Energy’s decision to present senior executives from OpenAI — the company’s most important tenant — showed its awareness of the skepticism.

Most companies hew to a specific timeline and only reveal their financials roughly one month before they start trading on an exchange.

SB Energy released its financials Sept. 1, but it is not expected to go public before mid- to late October, later than its original schedule.

Two people familiar with the company’s plans said they both wanted the option to go public in September and to also give investors more time if needed to get comfortable with its future plans and its financials.

Other companies expecting to go public this fall have more experience. Vantage Data Centers has already built more than 25 data centers; CyrusOne, which is backed by the private equity firms KKR and BlackRock, has built more than 55; and Switch operates several of the largest data center campuses in the world.

Nscale, which has plans to develop data centers across the globe and counts Anthropic and Microsoft among its customers, disclosed its finances Friday in preparation for a public offering in October. Bankers and investors say it could be the first test of how the market will price these deals in this more discerning environment.

“You cannot be long on artificial intelligence and not be supporting infrastructure build-out, because this has to go hand in hand,” said Harmol Samra, CEO of Host Digital, a data center developer.