Cerebras stock plunged nearly 20% this week to a post-IPO low, primarily driven by a report that Nvidia will power a crucial OpenAI AI model workload instead of Cerebras hardware, and pressure from the expiration of insider share lockup periods. This has seen the company’s market cap shrink from $95 billion to $39 billion. Despite a partial recovery after OpenAI CEO Sam Altman clarified Cerebras remains a “close partner,” the stock faces ongoing challenges from increased competition and executive share sales.
AI chipmaker Cerebras has experienced a significant downturn this week, with its stock plummeting nearly 20% to its lowest point since its high-profile market debut in May. The steep decline is largely attributed to intensified competition from chip giant Nvidia and the expiry of post-IPO share lockup periods, which has led to increased selling pressure from company insiders.
A recent report by research firm SemiAnalysis, widely circulated on X (formerly Twitter), revealed that OpenAI has opted for Nvidia's powerful graphics processing units (GPUs) to power the "Ultrafast" mode for its cutting-edge GPT-6.1 Sol AI model. This decision comes as a blow to Cerebras, which had previously secured a substantial deal with OpenAI for its specialized AI hardware. Following this news, Cerebras shares are now trading at less than half their initial pop after listing on the Nasdaq.
Cerebras Systems Inc. signage during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, US, on Thursday, May 14, 2026. Image: Michael Nagle | Bloomberg | Getty Images
The stock, which closed Friday at $166.43, faced further headwinds from the expiration of restrictions on some insider shares. However, there was a glimmer of hope as the stock rose almost 3% in extended trading on Friday. This uptick followed a clarifying statement from OpenAI CEO Sam Altman on X, addressing "speculation about our partnership with Cerebras." Altman asserted, "Cerebras is a close partner, and we have a deep engagement pushing on the frontiers of speed."
Despite Altman's reassurance, Cerebras has endured a turbulent period since its initial public offering. The company’s market capitalization, which once soared to $95 billion on its first day of trading—almost joining the ranks of tech behemoths like Meta and Alibaba—has now dwindled to just over $39 billion.
Investors were initially captivated by Cerebras as a promising alternative to Nvidia in the burgeoning AI hardware market. Cerebras specializes in crafting dinner plate-sized ASICs (Application-Specific Integrated Circuits), custom-built for AI inference workloads, and offers them as a cloud service from its own data centers. Earlier in January, Cerebras had announced a significant deal with OpenAI, valued at over $10 billion, to provide 750 megawatts of computing power through 2028.
The loss of a key OpenAI inference workload to Nvidia has significantly dampened the earlier investor enthusiasm. According to insights from McKinsey, AI inference workloads are projected to surpass training workloads in dominance within AI data centers by the end of this decade, highlighting the strategic importance of this particular segment.
Further exacerbating the stock's challenges is the influx of additional shares into the market post-IPO. The company's prospectus indicated that up to 19.4 million shares (approximately 8% of total shares outstanding) held by directors, officers, and employees became unlocked for sale on Wednesday. This follows previous unlockings of up to 14.6 million shares every two weeks since August 19.
Notably, CEO Andrew Feldman and CTO Sean Lie, both of whom became billionaires through the IPO process, have sold over $240 million worth of Class A shares between August 20 and September 25 under pre-adopted trading plans. Other executives have also engaged in share sales amounting to millions, adding to the downward pressure on the stock price.
For more insights, you can watch CNBC’s full interview with Cerebras Systems CEO Andrew Feldman.
