Artificial intelligence chipmaker Cerebras Systems has filed for an initial public offering (IPO), aiming to trade under the ticker symbol “CBRS” on the Nasdaq. The company, founded in 2016 and headquartered in Sunnyvale, California, plans to challenge industry leader Nvidia with its proprietary technology.
Cerebras’ main competitor, Nvidia, dominates the market with its graphics processing units (GPUs) widely used for training and running AI models. However, Cerebras highlights its WSE-3 chip, claiming it surpasses Nvidia’s popular H100 in terms of core count and memory capacity. The WSE-3 is also a physically larger chip. Alongside selling AI chips, Cerebras offers cloud-based services through its computing clusters.
According to Cerebras’ IPO filing, the company reported a net loss of $66.6 million in the first half of 2024 on sales of $136.4 million. This represents an improvement compared to the same period in 2023, when the company reported a net loss of $77.8 million and sales of $8.7 million. For the full year of 2023, Cerebras experienced a net loss of $127.2 million on revenue of $78.7 million.
In the second quarter of 2024 alone, Cerebras posted a net loss of $50.9 million on revenue of $69.8 million, a substantial increase in revenue from $5.7 million in the second quarter of 2023, though losses also grew from $26.2 million. The company attributed its rising operating expenses to increased personnel costs aimed at supporting revenue growth.
The AI chip market is becoming increasingly competitive, with tech giants Amazon, Google, and Microsoft developing their own AI chips. Nvidia, AMD, Intel, and Google, along with custom application-specific integrated circuits, are cited as Cerebras’ competitors in the IPO filing. Cerebras relies on Taiwan Semiconductor Manufacturing Company (TSMC) to produce its chips and warned potential investors about the risk of supply chain disruptions.
Cerebras’ largest customer is Group 42, a UAE-based AI firm and Microsoft investor, which accounted for 83% of Cerebras’ revenue in 2023. In May 2024, G42 committed to purchasing $1.43 billion worth of Cerebras products by March 2025. G42 currently holds less than 5% of Cerebras’ Class A shares but retains the option to acquire more based on its purchases.
The largest investors in Cerebras are venture firms Foundation Capital, Benchmark, and Eclipse Ventures. Other notable investors include Alpha Wave, Coatue, Altimeter, OpenAI CEO Sam Altman, and Sun Microsystems co-founder Andy Bechtolsheim. Co-founder and CEO Andrew Feldman, who previously sold SeaMicro to AMD for $355 million in 2012, is the only individual holding 5% or more of Cerebras’ shares.
Cerebras is one of a few companies moving forward with an IPO in 2024, a year where the technology IPO market has been sparse due to higher interest rates steering investors toward more profitable ventures. Notably, neither Morgan Stanley nor Goldman Sachs, the top tech investment banks, are involved in the Cerebras IPO. Instead, Citigroup and Barclays are leading the deal.
The company’s 2021 valuation was over $4 billion after raising $250 million in a funding round.
Featured Image courtesy of The Information
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