Cerebras Systems has priced its IPO at $185 per share, raising $5.55 billion and exceeding initial expectations. This valuation underscores the strong investor interest in the booming AI chip market.
The company, which develops specialized AI chips, is positioning itself as a key player in the ongoing silicon renaissance, with potential to challenge established tech giants.
Cerebras Systems, a prominent player in the artificial intelligence chip sector, has successfully priced its initial public offering (IPO) at $185 per share, surpassing initial expectations and indicating robust investor confidence in the burgeoning AI market. The IPO has raised a significant $5.55 billion for Cerebras, with the company selling 30 million shares. Underwriters also hold an option to purchase an additional 4.5 million shares.
This debut occurs during a period of intense growth and innovation in the semiconductor industry, often referred to as a "silicon renaissance." Major chip manufacturers like Intel, Advanced Micro Devices, and Micron have seen substantial stock gains recently as investors broaden their focus beyond NVIDIA to capitalize on the widespread AI boom. Cerebras' offering stands out as one of the largest tech IPOs in recent years, comparable to significant debuts from companies like Uber and Snowflake.
At its IPO price, Cerebras is valued at $56.4 billion on a fully diluted basis. CEO Andrew Feldman holds a stake worth approximately $1.9 billion.
Founded in 2016 and based in Silicon Valley, Cerebras has navigated a complex path to its Nasdaq listing under the ticker symbol CBRS. The company previously filed for an IPO in September 2024 but withdrew its submission after concerns were raised about its heavy reliance on a single major customer, Microsoft-backed G42 in the UAE. In response, Cerebras has been pivoting towards providing cloud services based on its chips, positioning itself against major cloud providers like Google and Microsoft, as well as competitors such as Oracle and CoreWeave.
While G42 represented 85% of Cerebras' revenue in 2024, this figure decreased to 24% in the past year. However, Mohamed bin Zayed University of Artificial Intelligence in the UAE became a significant client, accounting for 62% of revenue last year. A major development for Cerebras was a January deal with OpenAI, valued at over $20 billion for 750 megawatts of computing capacity. Cerebras asserts that its Wafer Scale Engine 3 chips offer superior speed and cost-effectiveness compared to traditional GPUs like those from NVIDIA.
The IPO pricing reflects a significant upward revision from initial estimates. Cerebras initially planned to sell 28 million shares at $115 to $125 per share, later increasing the offering to 30 million shares and raising the expected range to $150 to $160.
Notably, reports indicate that both Arm and SoftBank explored acquiring Cerebras in the weeks leading up to its IPO. Furthermore, a 2017 email exchange revealed OpenAI's prior interest in merging with Cerebras, viewing the chip company as a strategic asset for advancing artificial general intelligence (AGI). Greg Brockman, OpenAI's co-founder and president, highlighted the potential for exclusive access to Cerebras hardware to provide a significant advantage over competitors like Google. As of the IPO pricing, Greg Brockman's stake in Cerebras is valued at approximately $14.4 million, and Sam Altman's stake is worth about $16.5 million.
Major investors in Cerebras include Fidelity, with a stake valued at around $3.8 billion, and Benchmark, holding shares worth approximately $3.3 billion. Foundation Capital's holdings are estimated at $2.8 billion, and Eclipse possesses a $2.5 billion stake.
The IPO's lead underwriters are Morgan Stanley, Citigroup, Barclays, and UBS.
WATCH: Cerebras set to go public tomorrow: Here's what to expect
