Wall Street firms are increasingly pitching AI data centers as a major real estate investment, but these ventures are encountering growing political, liquidity, and project risks. Blackstone's Digital Infrastructure Trust (BXDC), a REIT launched earlier this year, has seen its shares decline by approximately 16% since its mid-May debut. Other firms like Blue Owl and Brookfield Asset Management are also pursuing similar strategies.

The sector faces significant headwinds, including political backlash leading to moratoriums on new hyperscale data center approvals in states like New York and Texas. Project risks are also evident, with Oracle's stock falling 4% in late September after it issued a force majeure notice for a New Mexico data center campus, citing regulatory hurdles and local opposition. Globally, an Nvidia and Blackstone-backed Australian data center company recently pulled its planned IPO due to weak investor interest.