Cerebras Systems, an artificial intelligence chip startup, has filed for its initial public offering (IPO) under the ticker symbol “CBRS” on the Nasdaq. The company competes with Nvidia in the AI chip market, offering the WSE-3 chip with more cores and memory compared to Nvidia’s popular H100. Cerebras also provides cloud services that leverage its own computing clusters. Despite growing sales, Cerebras reported a significant net loss in the first six months of 2024, with expenses increasing due to higher personnel costs to support revenue growth.
AI chips are in high demand, with major cloud providers like Amazon, Google, and Microsoft developing their own versions. Cerebras lists Nvidia, AMD, Intel, Microsoft, and Google as competitors, alongside internally developed custom application-specific integrated circuits and various private companies. Taiwan Semiconductor Manufacturing Company manufactures Cerebras chips, but the company warns investors of potential supply chain disruptions that could impact operations. Founded in 2016 and headquartered in California, Cerebras was valued at over $4 billion in a funding round in 2021, and Group 42, a UAE-based AI firm, accounted for 83% of the company’s revenue in 2023.
In the current IPO market, higher interest rates have led investors towards profitable assets, resulting in a sparse landscape for technology IPOs in 2024. Notable recent IPOs include social media app Reddit and data management software maker Rubrik. The Federal Reserve’s recent rate cut prompted gains in the tech-heavy Nasdaq Composite index. Cerebras’s IPO is being led by Citigroup and Barclays, as neither Morgan Stanley nor Goldman Sachs are on the deal. Major investors in Cerebras include venture firms Foundation Capital, Benchmark, and Eclipse Ventures, as well as Alpha Wave, Coatue, and Altimeter, with individual investors like OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim also holding stakes in the company.
Cerebras CEO Andrew Feldman, who previously sold server startup SeaMicro to AMD for $355 million in 2012, has positioned the company as a key player in the AI chip market. With a focus on developing high-performance chips and offering cloud services, Cerebras aims to differentiate itself from competitors like Nvidia and AMD. The company’s financials show significant revenue growth but also substantial losses, reflecting the competitive landscape and ongoing investment in technology development and personnel. Despite the challenges of a crowded market and potential supply chain disruptions, Cerebras continues to attract interest from investors and customers alike.
Overall, Cerebras Systems’ IPO filing marks a significant milestone for the company as it seeks to capitalize on the growing demand for AI chips and services. With notable investors and a focus on technological innovation, Cerebras aims to carve out a unique position in a competitive market. The company’s success will depend on its ability to continue developing cutting-edge technology, expanding its customer base, and managing financial performance in an evolving industry landscape.
