Cerebras Systems, a leading artificial intelligence chip startup, has officially filed for an initial public offering (IPO) under the ticker symbol “CBRS” on the Nasdaq. The move positions Cerebras to take on industry giant Nvidia, as it aims to capitalize on the rapidly growing demand for AI processing power.
Cerebras’ competitive edge lies in its unique WSE-3 chip, which boasts more cores and memory than Nvidia’s widely-used H100 chip. According to the company, the WSE-3 is physically larger and designed to outperform its rivals. In addition to hardware, Cerebras provides cloud-based services powered by its computing clusters, offering a comprehensive AI solution.
Financial Performance and Growth
Despite strong revenue growth, Cerebras has yet to achieve profitability. In the first half of 2024, the company reported a net loss of $66.6 million on sales of $136.4 million. Comparatively, during the first six months of 2023, Cerebras recorded $8.7 million in sales with a $77.8 million net loss. For the full year of 2023, the company posted a net loss of $127.2 million on $78.7 million in revenue.
Operating expenses have increased significantly in 2024, primarily due to rising personnel costs to support the company’s expanding business.
Competitive Landscape
Cerebras is entering a highly competitive market dominated by Nvidia, but other major players like AMD, Intel, Microsoft, and Google are also developing their own AI chips. In addition, cloud providers such as Amazon, Google, and Microsoft have invested heavily in custom AI chip solutions, adding pressure to Cerebras as it seeks to carve out its market share.
One of Cerebras’ major customers is Group 42 (G42), a UAE-based AI company backed by Microsoft. In 2023, G42 accounted for 83% of Cerebras’ total revenue, with a commitment to purchase $1.43 billion in Cerebras products by March 2025.
Manufacturing and Supply Chain Challenges
Cerebras’ chips are manufactured by Taiwan Semiconductor Manufacturing Company (TSMC). However, the company has cautioned potential investors that supply chain disruptions could have a significant impact on its production and financial performance.
Company Background and Leadership
Founded in 2016, Cerebras is headquartered in Sunnyvale, California. Its CEO and co-founder, Andrew Feldman, previously sold server startup SeaMicro to AMD for $355 million in 2012. Under Feldman’s leadership, Cerebras has attracted substantial investor interest. In a 2021 funding round, the company was valued at over $4 billion.
Key investors in Cerebras include Foundation Capital, Benchmark, Eclipse Ventures, Alpha Wave, Coatue, and Altimeter, with Feldman holding over 5% of the company’s shares. Notable individual investors include OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim.
Outlook for the Technology IPO Market
Cerebras’ IPO comes at a time when the technology IPO market has been slow in 2024, largely due to higher interest rates driving investors toward profitable assets. However, recent moves by the Federal Reserve, including a rate cut, have provided some optimism for tech companies like Cerebras seeking to go public. Citigroup and Barclays are leading Cerebras’ IPO, but major tech investment banks Morgan Stanley and Goldman Sachs are notably absent from the deal.
As Cerebras gears up for its IPO, it hopes to disrupt Nvidia’s dominance and establish itself as a key player in the AI chip industry.
