Resolved the issue, if anyone comes across the same issue, ensure that your mocks are properly mocked:

Failing:

jest.mock('@mui/x-date-pickers/LocalizationProvider', () => ({
  __esModule: true,
  default: (p: { children?: any }) => p.children,
}));

Passing:

jest.mock('@mui/x-date-pickers/LocalizationProvider', () => ({
  __esModule: true,
  LocalizationProvider: (p: { children?: any }) => p.children,
}));