I was able to resolve this with two steps.

1. Install @angular-builders/jest if not using latest version of angular you may want to specify the version ie if on angular 16 run npm install @angular-builders/jest@16 otherwise just a npm install @angular-builders/jest will be enough
2. update the test.builder in angular.json config to use @angular-builders/jest:run

my final angular.json test config looks as follows:

"test": {
  "builder": "@angular-builders/jest:run",
  "options": {
    "polyfills": [
      "zone.js",
      "zone.js/testing"
    ],
    "tsConfig": "tsconfig.spec.json"
  }
}

If you use Angular CLI this library would be very helpful.
It will allow you to keep your workspace clear of boilerplate code related to Jest setup and also run your tests with Angular CLI (ng test).
This will also save you the trouble of configuring Jest.

As for your specific error, it is most probably related to your tsconfig.spec.json. Have you changed the module field to commonjs? This is required to make Jest work.

For more details read this article.

Disclaimer: I'm the owner of this library.