SB Energy IPO: Plenty of Risk for This AI Data-Center Stock, But Is There Any Return?

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SB Energy (SBE) announced on September 1 that it has filed for an initial public offering (“IPO”). Although the company hasn’t provided a listing date, reports say it could begin trading as soon as this month. The developer of artificial intelligence (“AI”) data centers and power projects is looking to raise between $5 billion and $7 billion.

With an estimated market capitalization of more than $50 billion, the offering would put SB Energy among the largest IPOs ever, even if its market cap looks modest in an IPO year with big names such as SpaceX (SPCX) and the upcoming Anthropic debut.

The AI infrastructure company is backed by some of the biggest investors in the sector, including SoftBank (SFTBY) – where the “SB” in the company’s name comes from – as well as OpenAI and Nvidia. OpenAI CEO Sam Altman is also a personal investor in SB Energy.

Despite these big names, SB Energy plans to conduct its IPO with a history of losses and with almost all of its data-center facilities yet to be constructed. Meanwhile, many established, cash-flowing data-center companies are planning IPOs that may hit the market in weeks.

In the six months ending in June 2026, SB Energy reported sales of just $138.7 million, with most of that coming from changes in the value of financial instruments (i.e., not customer purchases). Similarly, while it reported a loss of $3.2 billion over the same period, all but $45 million of that loss was non-cash expenses for stock compensation or losses on financial instruments.

These results show that SB Energy doesn’t have many assets producing cash flow right now.

In fact, it has no operational data centers at the moment, but it does have:

• 8.8 gigawatts of data centers contracted or under construction

• 5.5 gigawatts of power projects contracted, under construction, or operating

With the contracts it has signed for services at these facilities, SB Energy has a $439 billion sales backlog.

The details matter a lot here. Of its 8.8 gigawatts of data-center capacity, just 0.8 gigawatts are actually under construction now, and it could take 24 to 36 months to bring new capacity online. As SB Energy says in its prospectus: “No data center capacity is currently in operation.”

So, investors in SB Energy must be comfortable with a company that will need to ramp up over time. For example, Nvidia (NVDA) has committed to invest $1.5 billion at the stock’s IPO price in a private placement. SB Energy has also issued financial derivatives known as warrants to key tenant OpenAI, valued at $5.5 billion. These gain in value if SB Energy stock rises.

Even if you are bullish on AI, the data-center developer presents some serious risks, and the prospectus takes pains to show how much SB Energy relies on OpenAI for its future success.

SB Energy’s Biggest Risk Is OpenAI

SB Energy is tied at the hip to OpenAI, with the AI lab committing to be a significant tenant at SB’s upcoming data centers. But given its relationship with OpenAI, it’s more than just that, as SB Energy explains in its prospectus:

We are substantially dependent on OpenAI as a tenant and strategic partner, and any adverse change in its financial condition or willingness to perform its contractual obligations could materially and adversely affect our business.

Contracts with OpenAI, as well as controlling shareholder SoftBank, “constitute a significant portion of our near-term data center revenue,” according to SB Energy.

Beyond the issue of OpenAI being a key customer, both OpenAI and SoftBank are strategic partners, too, creating a conflict of interest that could affect regular shareholders.

The prospectus explains one of the potential concerns here:

For example, our board of directors’ willingness or ability to enforce lease obligations or pursue remedies against a tenant that is simultaneously our controlling shareholder (or a significant investor with board designation rights) may be constrained in ways that would not apply with respect to an unaffiliated tenant.

While the company has taken steps to mitigate these conflicts of interest, they’re inherent in this structure.

Because of key tenant OpenAI’s history of operating losses and its own history of losses, SB Energy has done what many AI firms have done to get access to financing… turn to Nvidia.

The world’s most valuable company has been backstopping many AI deals of late, becoming a “central bank of AI,” to get data-center projects off the ground when they might not have moved forward otherwise.

In a recently announced 10-gigawatt facility in Ohio, for example, Nvidia is providing financial guarantees that let SB Energy secure financing on better terms. SB Energy is leasing the facility to OpenAI, and given OpenAI’s losses, it might not have been able to do the deal. The first phase of the deal won’t even begin until 2028, and then only at 8% of the facility’s capacity.

The size of this project shows that the AI build-out is more than a chip supply issue. Access to critical financing and electrical power are both huge advantages in the AI race.

So, OpenAI is an essential partner in SB Energy’s success as an investment.

OpenAI Is Key to the AI Boom Not Busting

Since SB Energy relies so heavily on OpenAI, its continued existence depends on OpenAI’s survival. And it’s not just SB Energy that’s propped up in some way or another by OpenAI. Because of the dense interconnection among a relatively few AI companies, OpenAI is existentially critical to AI as an industry and to many, though not all, companies in the sector.

While OpenAI is a high-profile company, its viability is anything but a given. It’s burning tons of cash each quarter and may never become profitable. It recorded an operating loss of $20.9 billion in 2025, for example. Then in the first quarter, OpenAI recorded a $9.3 billion loss, followed by a $12.3 billion loss in the second quarter, when including stock compensation.

Because it’s losing money on such a massive scale, OpenAI must repeatedly access the capital markets, despite a $122 billion fundraising round in March. For now, CEO Sam Altman has put off a potential IPO to 2027 because he can’t get a $1 trillion valuation for the stock.

OpenAI’s survival matters to the industry because it’s tightly connected to so many other players. For example, OpenAI has committed to spending hundreds of billions of dollars with Oracle (ORCL), and if it can’t fulfill its contract, Oracle shares could plummet. A similar situation exists with neocloud provider CoreWeave (CRWV), where a large portion of its future revenue depends on OpenAI’s existence.

If OpenAI begins having difficulty raising money, it could ripple across the sector, making it increasingly difficult for any AI project to raise funding. For a firm like SB Energy that has yet to bring a data center online, such a “confidence event” could stop it cold.

So, investing in SB Energy at this stage of the AI build-out is a wager that AI funding can continue on trend for at least a couple of years until it can get a functional data center powered up. Given the shaky state of AI financing, it’s not a sure thing by any stretch, and it could be why SB Energy is rushing to get its IPO across the finish line, even without an operational data center.

That’s not the kind of favorable risk-reward setup that tends to work out well very often.

Regards,

James Royal, PhD

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