What's a fair price for SB Energy's IPO?

Stargate Project partner SB Energy filed its S-1 for a U.S. IPO yesterday, and the company’s forthcoming market debut has all the makings of a SpaceX 2.0.

By which I mean, the company’s projected valuation is completely detached from its current business fundamentals. Reuters reported that bankers are expecting a $50 billion-plus valuation, even as SB Energy did not disclose the IPO’s target raise or valuation.

The SoftBank subsidiary earned $138.7M in H1 2026 from its power business. Its contracted data center portfolio included 8.8 GW of critical IT capacity, all but 50 MW of which will be leased to OpenAI, for $430B in total contract value.

But not a single watt for those contracts is currently operational, and SB Energy is only expected to recognize 10% of the $430B contract backlog over the next six years.

Of course, like SpaceX, investors won’t value SB Energy based on its current operations — they’ll value it on potential, on the story SB Energy is telling.

And a damn good story it is. The crown jewel of the Stargate Project, SB Energy’s 10 GW gross (8 GW IT) flagship data center in Ohio, the PORTS-Pike campus, is the largest, most ambitious data center project in the world, and its partners for this site — NVIDIA and OpenAI — are arguably the two most important and recognizable companies in AI.

SB Energy expects to have PORTS-Pike’s 800 MW phase one online in 2028. For the rest, it will need to develop and operate 9.2 GW of natural gas generation, which will be bankrolled through the U.S.-Japan Strategic Trade and Investment Agreement and owned by the federal government once complete.

Building a 10 GW data center is unprecedented, and while constructing a 9.2 GW cluster of natural gas plants isn’t, it does add to the project’s execution risk, especially since these gargantuan projects will be tackled in tandem.

NVIDIA is providing a $105B guarantee for 4.25 GW (and may commit more) to mitigate some of the risk and lubricate SB Energy’s capital markets negotiations for the ocean of liquidity it will need for the project. But in what is perhaps one of the S-1’s most interesting disclosures, OpenAI indemnifies NVIDIA for this guarantee, so it will reimburse NVIDIA for any costs it incurs under its residual-value guarantees to SB Energy.

Now, that guarantee would be null once OpenAI achieves “a satisfactory credit rating,” but imagine a scenario — even if unlikely — where OpenAI defaults on SB Energy and then NVIDIA steps in to save SB Energy: NVIDIA has to eat the loss.

Some analysts hand-waved this risk, saying that, while the credit risk to NVIDIA is of course not zero, it’s not substantial for the most valuable company in the world, with one of the highest credit ratings in the world and ungodly cash flows.

Others said that this is a more egregious form of the circular financing that has become central to NVIDIA’s growth strategy: OpenAI economically promises to reimburse NVIDIA, while NVIDIA's stronger balance sheet is what makes SB Energy's financing viable in the first place.

At any rate, there’s plenty of risk in a project of this size, but with that risk could come outsized reward. SB Energy could well become one of the most valuable data center companies in the world if it realizes this 10 GW project — but that doesn’t mean I want to own it out of the gate.

-CMH

Today, we break down SB Energy’s IPO plans – with some bankers saying the stock could fetch a $50B valuation despite not yet having an active data center – and dig into the nature of the intertwined financial relationship between SB Energy and its fellow Stargate pioneers, Open AI and NVIDIA. For other news, we cover Google’s 396 MW PPA with geothermal energy startup Fervo and Bitdeer moving one step closer to an AI deal with a $100M land acquisition for its Rockdale data center. 

Bitdeer (NASDAQ: BTDR) completed a roughly $100 million cash purchase of 200 acres near Rockdale, Texas, on Tuesday, securing fee-simple land for a planned AI/HPC expansion.

Bitdeer said its Milam County sites have 563 MW of interconnected capacity and a dedicated water supply. Existing plans would increase capacity to 742 MW; in the county, the operator controls about 255 acres and 742 MW across existing and planned power capacity.

KBW said the purchase removes a primary development constraint at Rockdale, but said it remained unclear whether the relevant power-interconnection and water rights transferred with the parcel. The distinction determines how much of the site can move directly toward data-center development. Read more.

KBW analyst Stephen Glagola is maintaining his Bitdeer (NASDAQ: BTDR) “Market Perform” rating with a $10 price target, per a bank note published Wednesday. The target implies 3.4% downside from the $10.35 share price listed in the note. KBW previously cut its target from $14 in August.

The update comes after Bitdeer bought about 200 acres near its Rockdale, Texas, facility for approximately $100 million in cash on Tuesday, removing a land-control constraint on potential AI/HPC development. Read more.

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