Wall Street’s enthusiasm for data centers, once seen as a prime opportunity tied to the rapid growth of artificial intelligence (AI), is facing increasing skepticism as several planned initial public offerings (IPOs) are delayed or reconsidered. The hesitation comes amid mounting concerns over the viability and sustainability of these large-scale infrastructure projects, as well as broader economic uncertainties.
SB Energy, a subsidiary of Japan’s SoftBank and the developer behind what would be the world’s largest data center complex in Ohio, was expected to launch its IPO this month with a valuation exceeding $50 billion. However, investors have expressed doubts regarding the company’s ambitious projections, pushing back against its high valuation and the associated risks. Despite backing from major AI players such as OpenAI and Nvidia, SB Energy has yet to operate any facilities, and its projected revenue backlog—estimated at $439 billion over two decades starting in 2028—has been met with skepticism. Efforts to reassure investors included a recent call featuring OpenAI executives discussing the project’s potential, but bankers have struggled to generate sufficient demand within the targeted price range.
Similarly, Holtec, a nuclear energy firm that aims to provide power to data centers through small modular reactors, announced it was postponing its IPO indefinitely. Holtec cited eroding investor confidence and the ongoing uncertainty surrounding data center development as key factors. This move follows Holtec’s parent company’s decision to halt the construction of the Ohio data center campus, which had drawn criticism from environmental advocates, local residents, and policymakers concerned about its high energy consumption and impact on regional power grids.
The data center sector has emerged as a growing focal point of public debate, especially in rural communities where sprawling facilities consume significant amounts of electricity, fueling local opposition. Some states have responded by implementing restrictions or slowing permits for new construction. This backlash is further compounded by concerns over the environmental footprint of data centers, despite commitments from technology giants such as Meta, Google, Amazon, and Microsoft to pursue renewable energy offsets for their facilities.
Other companies linked to data center infrastructure have also moderated their ambitions. The power company Aggreko, which serves data centers among other sectors, has decelerated its IPO timeline due to challenges in the data center market alongside broader economic headwinds including rising interest rates and geopolitical uncertainties.
Nonetheless, the fundamental demand for data center capacity, critical to supporting AI’s expanding computational needs, remains robust. Industry analysts estimate that building the necessary infrastructure to sustain the AI boom could require over $5 trillion in investment by 2030. Several technology firms have committed more than a trillion dollars toward expanding their data center footprint.
Although some investors see the current market turbulence as a temporary setback and anticipate a recovery, others caution that the rapid pace of expansion could result in overcapacity and mounting financial risks. Only two data center companies, Equinix and Digital Realty Trust, currently trade publicly as pure-play operators, and their share prices have seen modest declines recently.
The unfolding developments reflect the complex interplay between technology growth, infrastructure demands, environmental considerations, and financial market dynamics, highlighting the challenges of scaling data centers amid evolving economic and regulatory landscapes.