Artificial intelligence chip startup Cerebras Systems filed its prospectus for an initial public offering on Monday. The company plans to trade under the ticker symbol “CBRS” on the Nasdaq.
Cerebras is highly reliant on G42 (UAE), and G42 could gain more control over the company if it buys more kit from the AI chip startup. but Cerebras doesn't know if CFIUS will approve of G42 buying up its shares. w/ @kifleswing https://t.co/xHiPDdBFzq
— Jordan Novet (@jordannovet) September 30, 2024
According to the filing, Cerebras had a net loss of $66.6 million in the first six months of 2024 on $136.4 million in sales.
Cerebras is an unprofitable AI company utterly dependent on selling chips to one of its biggest investors, which might not actually be able to take them out of the country.
Naturally it is seeking an IPO with an $8bn valuation. https://t.co/6KYYDwg9Lw
— Robin Wigglesworth (@RobinWigg) October 1, 2024
This compares to a net loss of $77.8 million and $8.7 million in sales for the same period in 2023. Cerebras competes with Nvidia, whose graphics processing units are the industry’s leading choice for training and running AI models. The company states on its website that its WSE-3 chip comes with more cores and memory than Nvidia’s popular H100.
It’s also physically larger. In addition to selling chips, Cerebras offers cloud-based services utilizing its computing clusters. For the full year of 2023, Cerebras reported a net loss of $127.2 million on revenue of $78.7 million.
Good to see the numbers suggesting AI chip startup Cerebras is a real business. https://t.co/gA22nL6wXb
— Don Clark (@donal888) October 1, 2024
Here’s what Cerebras CEO Andrew Feldman shared with me about how the company’s AI chip will compete with Nvidia https://t.co/zCmAqcjJue via @YouTube $nvda @CerebrasSystems
— Seema Mody (@seemacnbc) October 2, 2024
The company posted a net loss of $50.9 million on $69.8 million in revenue in the second quarter of this year, compared with a $26.2 million loss and $5.7 million in revenue during the same period a year earlier. The company noted that operating expenses have risen this year due to higher personnel costs to support revenue growth. The AI chip market is growing and highly competitive, with cloud providers also developing their own AI chips.
Group 42, which counts Microsoft as an investor, accounted for 83% of Cerebras’s revenue last year.
Cerebras’ IPO and market position
Cerebras cites Nvidia, AMD, Intel, Microsoft, Google, and various private companies as competitors.
Cerebras’ chips are produced by Taiwan Semiconductor Manufacturing Company. The startup cautioned investors that any potential supply chain disruptions could negatively impact the company. Cerebras was founded in 2016 and is based in Sunnyvale, California.
The company is led by co-founder and CEO Andrew Feldman, who previously sold server startup SeaMicro for $355 million in 2012. In 2021, Cerebras was valued at over $4 billion following a $250 million funding round. In May, G42 committed to purchasing $1.43 billion in orders from Cerebras by March 2025, with G42 owning under 5% of Cerebras’ Class A shares and an option to buy more depending on product purchases.
The technology IPO market has generally been sparse in 2024 due to higher interest rates pushing investors toward profitable assets. Neither Morgan Stanley nor Goldman Sachs, the two leading tech investment banks, are involved in the deal. The offering is being led by Citigroup and Barclays.
According to the filing, 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%. Other notable investors include OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim.
The only individual owning 5% or more is Feldman.
April Isaacs is a news contributor for DevX.com She is long-term, self-proclaimed nerd. She loves all things tech and computers and still has her first Dreamcast system. It is lovingly named Joni, after Joni Mitchell.
