Multiple firms involved in the artificial intelligence data center sector are postponing their initial public offerings due to growing skepticism from Wall Street. This hesitation is fueled by new obstacles in data center development, including increasing opposition from local communities across the US, and uncertainty stemming from leading AI executives pledging to slow down the development of the newest AI models. The industry is also grappling with constraints such as a scarcity of large-scale power blocks and labor shortages, making it harder to meet demand.
Several companies have been impacted, including SB Energy, Holtec, and Aggreko. SB Energy, backed by SoftBank, delayed its IPO as investors reportedly balked at its proposed valuation of over $50 billion, partly due to a lack of a track record in bringing data centers online despite significant contracted capacity. Nuclear energy firm Holtec indefinitely postponed its planned IPO, which had aimed for a valuation of up to $10 billion, citing factors that impaired investor confidence, especially the uncertainty of data center development. Aggreko, which provides power solutions, is also slowing its IPO process.
Adding to the challenges are rising interest rates, with Treasury yields reaching their highest levels since 2007, making the AI infrastructure buildout more expensive. JPMorgan Chase estimated that $4.1 trillion in AI-related debt will be issued through 2030, and companies are now facing higher borrowing costs. Lenders are becoming pickier about projects, even when borrowers agree to higher rates. This comes as a nationwide backlash against AI data centers intensifies, with a recent poll showing 69% opposition to their construction in local areas.
