Cerebras Systems files for IPO to compete in the growing market for artificial intelligence chips
Artificial intelligence (AI) chip startup Cerebras Systems has filed its prospectus for an initial public offering (IPO) with plans to list on the Nasdaq under the ticker symbol âCBRS.â Founded in 2016 and headquartered in Sunnyvale, California, the company has gained notoriety in the AI ââchip industry by directly competing with giants like Nvidia.
Cerebras' WSE-3 chip, described on its website as superior to Nvidia's H100 in terms of cores and memory, is physically larger and designed to handle more complex artificial intelligence models. In addition to selling chips, Cerebras also offers cloud-based services, drawing on its own computing clusters to deliver advanced AI solutions, CNBC reports.
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A competitive and growing market
The AI ââchip market is highly competitive and growing rapidly, with tech giants like Amazon, Google and Microsoft developing their own chips to train and run AI models. Cerebras Systems faces fierce competition, not just from Nvidia, but also from the likes of AMD, Intel and custom solutions developed by the tech companies themselves.
Interestingly, Group 42, a UAE-based AI firm that counts Microsoft as one of its investors, accounted for 83% of Cerebrasâ revenue last year, highlighting the companyâs reliance on large corporate deals to sustain its growth.
Cerebras' financial performance
Despite its projection and success in its sector, Cerebras remains a loss-making company. In the first six months of 2024, the company reported a net loss of $66.6 million on revenues of $136.4 million. In 2023, the company reported a net loss of $127 million on revenues of $78.7 million, reflecting an improvement in sales but a continuing challenge in terms of profitability.
However, revenue growth in the second quarter of 2024, which amounted to $69.8 million compared to $5.7 million in the same quarter last year, shows positive momentum in the adoption of its AI solutions.
Investors and valuation
Cerebras Systems was valued at over $4 billion following a $250 million funding round in 2021. Its investors include notable names such as Abu Dhabi Growth Fund, Altimeter Capital, Benchmark, Foundation Capital, and key tech figures such as OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim.
Cerebras' largest shareholder is venture capital firm Foundation Capital, followed by Benchmark and Eclipse Ventures. Among individual investors, Andrew Feldman, the company's co-founder and CEO, is the only one with more than a 5% stake.
Context of technology IPOs in 2024
The tech market has seen a decline in IPOs during 2024, mainly due to rising interest rates, which have diverted investor interest towards more profitable assets. However, some key tech companies such as Reddit and Rubrik have managed to go public so far this year, taking advantage of the change in market conditions.
With the Federal Reserve recently cutting rates, tech companies like Cerebras are looking to take advantage of the renewed optimism in the sector.
In summary
Cerebras Systemsâ IPO represents a new opportunity for investors looking to capitalize on the growth of the increasingly competitive AI chip market. With strong backing from key investors and advanced technology, Cerebras will look to establish itself against giants like Nvidia and take advantage of the growing interest in AI solutions globally.
