SoftBank's ambitious plan to take its data center subsidiary public has hit a significant roadblock, signaling a growing fracture in Wall Street's enthusiasm for the AI infrastructure buildout.
SB Energy, the SoftBank unit behind a massive Ohio project, has postponed its initial public offering to late October after underwriters struggled to secure enough buyers at the targeted valuation of $50 billion or more. The delay directly threatens the funding pipeline for the facility, which is slated to become the world's largest data center, and raises fresh doubts about whether it can be delivered on schedule.
This IPO setback reflects a broader shift, as community-level resistance to data centers now ripples into capital markets. Investors are increasingly questioning growth projections and construction risks across the sector, prompting companies and their advisors to rethink plans for raising tens of billions in public markets. The hesitation is not isolated — nuclear power firm Holtec also indefinitely shelved its own IPO last week, explicitly citing "uncertainty in data center development" as the primary factor.
SB Energy's Ambitious Vision Hampered by Zero Operating History
SB Energy, a subsidiary of Japan's SoftBank Group, aims to build and operate a data center campus in Ohio that could eventually reach 10GW of IT load, making it the largest such facility globally. To support this, the company plans to construct 10GW of new power generation, including 9.2GW from natural gas.
The business model hinges on a single anchor customer: the entire facility would be leased exclusively to OpenAI, with projected cumulative revenue of $439 billion over roughly 20 years starting in 2028. However, investors are balking at the core discrepancy — SB Energy has no operational data centers to date, yet is seeking a valuation exceeding $50 billion. This lack of a proven track record stands as a primary concern among institutional investors.
Days before the delay, SB Energy attempted to shore up confidence by hosting a conference call featuring OpenAI CFO Sarah Friar and infrastructure chief Sachin Katti to discuss the Ohio project's prospects. Some investors viewed the call itself as an admission of market skepticism, but the effort ultimately failed to prevent the postponement.
Financing Structure Under Strain; Nvidia Scales Back Support
Signs of strain in the project's financing had emerged even before the IPO stumbled. Nvidia initially pledged up to $250 billion in support for SB Energy's project but, after facing investor pushback on risk exposure, slashed this to a $105 billion "residual value guarantee" backstop intended to lower debt costs. Nvidia's direct equity investment was also trimmed from $30 billion to $15 billion.
IPO proceeds are critical to ongoing construction. Analysts note that because the listing can't simply be shelved without consequence, SoftBank may ultimately be forced to accept a significantly lower valuation, shrink the offering size, and seek fresh capital under harsher terms — creating a downward spiral.
Public Backlash and Political Headwinds Compound Sector Woes
SB Energy's difficulties are emblematic of systemic pressure gripping the entire data center industry. Public opposition has mounted for months, particularly in rural communities where residents voice concerns over water consumption, air quality, and grid strain from these sprawling, energy-hungry facilities. Ohio has emerged as a flashpoint for this political fight, and SB Energy's project sits squarely in the crosshairs.
Political uncertainty adds another layer. New Mexico's Democratic gubernatorial candidate and former Interior Secretary Deb Haaland has pledged to pause all new data center projects if elected, demanding developers invest heavily in renewables instead. Meanwhile, Texas Governor Abbott recently ordered a halt to new data center construction.
In listed markets, only Equinix and Digital Realty Trust focus exclusively on data center ownership, and both have seen their shares dip 1-2% this month. Data center companies had been expected to account for roughly one-third of new IPO volumes for the remainder of 2026, a projection now facing serious headwinds.
Ripple Effects Threaten OpenAI's Stargate Initiative
The ripple effects of SB Energy's IPO delay extend well beyond a single project. Alongside Oracle's "Project Jupiter" in New Mexico (planned capacity of 4.5GW), SB Energy's Ohio campus forms a core pillar of OpenAI's "Stargate" computing buildout, with combined planned capacity exceeding 10GW.
Project Jupiter's $18 billion leveraged loan has already slid to 89-91 cents on the dollar in secondary trading, a distressed level, due to similar community opposition over water and air concerns and a rejection by New Mexico's land office of a natural gas pipeline permit application.
Additionally, falling AI token prices and Chinese open-source models eroding the market share of American frontier AI firms are amplifying investor worries about OpenAI's commercial prospects, which in turn saps confidence in the infrastructure projects tied to its growth.
If either of these flagship projects faces significant delays or outright cancellation, it would deliver a material blow to OpenAI's own IPO ambitions and cast a long shadow over the entire AI infrastructure investment thesis.
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