AI chipmaker Cerebras files for IPO to take on Nvidia

Artificial intelligence chip startup Cerebras Systems on Monday filed its prospectus for an initial public offering, with plans to trade under the ticker symbol “CBRS” on the Nasdaq.

Cerebras competes with Nvidia, whose graphics processing units are the industry’s choice for training and running AI models. Cerebras says on its website that its WSE-3 chip comes with more cores and memory than Nvidia’s popular H100. It’s also a physically larger chip. In addition to selling chips, Cerebras offers cloud-based services that rely on its own computing clusters.

Cerebras had a net loss of $66.6 million in the first six months of 2024 on $136.4 million in sales, according to the filing. For the fist six months of 2023, the company had a net loss of $77.8 million and $8.7 million in sales.

For the full year of 2023, Cerebras reported a net loss of $127.2 million on revenue of $78.7 million.

The company reported a net loss of $50.9 million on $69.8 million in revenue in the second quarter, compared with a $26.2 million loss and $5.7 million in revenue in the same period a year earlier.

Operating expenses have increased this year in part because of higher personnel costs to support revenue growth, the company said.

AI chips are a growing and crowded market. Cloud providers Amazon, Google and Microsoft have developed their own AI chips. The company said that Group 42, a UAE-based AI firm that counts Microsoft as an investor, accounted for 83% of Cerebras’s revenue last year.

In addition to Nvidia, Cerebras cites AMD, Intel, Microsoft and Google as competitors, “as well as internally developed custom application-specific integrated circuits and a variety of private companies.”

Taiwan Semiconductor Manufacturing Company makes the Cerebras chips. Cerebrus warned investors that any possible supply chain disruptions may hurt the company.

Cerebras was founded in 2016 and is based in Sunnyvale, California. Andrew Feldman, the startup’s co-founder and CEO, sold server startup SeaMicro to AMD for $355 million in 2012.

The company said in 2021 that it was valued at over $4 billion in a $250 million funding round.In May, G42 committed to purchasing $1.43 billion in orders from Cerebras before March 2025, according to the filing. G42 currently owns under 5% of Cerebras’ Class A shares, and the firm has an option to purchase more depending on how much Cerebras product it buys.

The technology IPO market has generally been sparse in 2024, as higher interest rates pushed investors toward profitable assets. Social media app Reddit went public on the New York Stock Exchange in March, and data management software maker Rubrik followed in April. Earlier this month, the Federal Reserve pushed ahead with its first rate cut since 2020, prompting gains in the tech-heavy Nasdaq Composite index.

Neither Morgan Stanley nor Goldman Sachs, the two leading tech investment banks, are on the deal. Citigroup and Barclays are leading the offering.

The biggest investor in Cerebras is venture firm Foundation Capital, followed by Benchmark and Eclipse Ventures. Alpha Wave, Coatue and Altimeter each own at least 5% as well, according to the filing. Other investors include OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim. The only individual who owns 5% or more is Feldman.

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