Cerebras files for IPO as it challenges Nvidia in AI chips

The filing depicts a company still in the early stages of taking on Nvidia and other established chipmakers, but it looks to gain an edge with a different approach

Cerebras Systems Inc., a startup that looks to challenge Nvidia Corp. in artificial intelligence computing, filed for an initial public offering Monday and released financial information showing a fast-growing but still relatively small operation.

In a filing with the US Securities and Exchange Commission, Cerebras disclosed that its sales increased to $136.4 million in the first six months of the year, up from $8.7 million in the year-earlier period. Cerebras had previously filed confidentially for the IPO in August.

The Sunnyvale, California-based firm recorded a net loss of $66.6 million in the six-month period, compared with a net loss of $77.8 million a year earlier, the filing shows. It also revealed that it depends on Abu Dhabi’s Group 42 Holding Ltd., an AI company better known as G42, for most of its revenue.

The filing depicts a company still in the early stages of taking on Nvidia and other established chipmakers, but it looks to gain an edge with a different approach. CS-3, Cerebras’ flagship system, is optimized to handle AI computing workloads and can be clustered together to power AI supercomputers.

Founder and Chief Executive Officer Andrew Feldman said his company’s chips — and the computing systems equipped with them — will upend the AI computing industry. So far, the tens of billions of dollars poured into running AI models and generating responses have mostly flowed to Nvidia’s graphics processing units, or GPUs.

Cerebras and the selling shareholders won’t disclose proposed terms for the share sale, including the company’s valuation in a listing, until a later filing. A listing could raise as much as $1 billion at a $7 billion to $8 billion value, Bloomberg News has reported.

Competitive Market

The Silicon Valley company’s listing plan is one of the most watched tech offerings this year because of the AI connection — a theme that resonates with investors — but it’s also a market that’s increasingly competitive.

Cerebras’ direct competitor, Ampere Computing LLC, is exploring a potential sale instead of an IPO, suggesting that it doesn’t see an easy path to public listing, Bloomberg News reported earlier this month. The semiconductor startup is backed by Larry Ellison’s Oracle Corp.

G42, which operates data centers, provided Cerebras with 87% of its sales in the six months ended June 30, according to Monday’s filing. That’s an increase from 83% last year. The arrangement with the United Arab Emirates company means a large chunk of Cerebras’ revenue is reliant on permission from the US government, specifically the Department of Commerce’s Bureau of Industry and Security, or BIS.

Cerebras has a license from BIS to export its CS-2 systems to G42 in the UAE. But so far all of the systems that it’s sold — and the ones that G42 has ordered — will be deployed in data centers in the US, the chipmaker said.

The licensing process can be time-consuming, and there’s no assurance that BIS will deal with requests in a speedy manner, Cerebras said. The government also may impose burdens that the company or customers can’t accept.

IPO Rebound?

A first-time share sale by Cerebras would boost the volume of tech new offerings, which have suffered in recent months as investors pulled back from tech and AI stocks. The aggregate amount raised by tech IPOs so far this year amounted to $6.7 billion, lower than the $8.3 billion for the same period last year, according to data compiled by Bloomberg.

Overall, US IPOs continue along a steady path to recovery, with $33.5 billion raised so far this year, nearly 53% more than the volume for the same period in 2023, the data show.

Cerebras products are used by corporations, research institutions and governments to develop proprietary models and train open-source models, the filing shows.

The company raised $250 million in a series F financing round in 2021, valuing it at more than $4 billion, according to a statement at the time. The round was led by Alpha Wave Ventures, Abu Dhabi Growth Fund and G42. Cerebras’ investors include Altimeter Capital, Benchmark Capital and Coatue Management, the statement showed.

The offering is being led by Citigroup Inc. and Barclays Plc. The company plans for its shares to trade on the Nasdaq Global Market under the symbol CBRS.