Cerebras files for IPO

Artificial intelligence chip startup Cerebras Systems filed its prospectus for an initial public offering on Monday and plans to trade on the Nasdaq under the ticker symbol “CBRS.”

Cerebras competes with Nvidiawhose graphics processing units are the industry's first choice for training and operating AI models. Cerebras says on its website that its WSE-3 chip has more cores and memory than Nvidia's popular H100. It's also a physically larger chip. In addition to selling chips, Cerebras also offers cloud-based services based on its own computing clusters.

According to the information, Cerebras recorded a net loss of $66.6 million on revenue of $136.4 million in the first six months of 2024. In the first six months of 2023, the company reported a net loss of $77.8 million and revenue of $8.7 million.

For full-year 2023, Cerebras reported a net loss of $127.2 million on revenue of $78.7 million.

The company reported a second-quarter net loss of $50.9 million on revenue of $69.8 million, compared to a loss of $26.2 million on revenue of $5.7 million. dollars in the same period last year.

Operating costs increased this year in part due to higher personnel costs to support sales growth, the company said.

AI chips are a growing and crowded market. Cloud provider Amazon, Google And Microsoft have developed their own AI chips. The company said Group 42, a United Arab Emirates-based AI company that counts Microsoft as an investor, accounted for 83% of Cerebras' revenue last year.

In addition to Nvidia, Cerebras also names AMD, Intel, Microsoft and Google as competitors, “as well as internally developed custom application-specific integrated circuits and a variety of private companies.”

Taiwan Semiconductor Manufacturing Company makes the Cerebras chips. Cerebrus warned investors that potential supply chain disruptions could harm the company.

Cerebras was founded in 2016 and is based in Sunnyvale, California. Andrew Feldman, co-founder and CEO of the startup, sold the server startup SeaMicro AMD for $355 million in 2012.

The company announced in 2021 that it was valued at over $4 billion in a $250 million funding round. In May, G42 committed to purchasing $1.43 billion in Cerebras orders through March 2025, the filing said. G42 currently owns less than 5% of Cerebras' Class A shares, and the company has the option to acquire more depending on how many Cerebras products it purchases.

The technology IPO market was generally sparse in 2024 as higher interest rates pushed investors toward profitable assets. Social media app Reddit went public on the New York Stock Exchange in March, and data management software maker Rubrik followed in April. Earlier this month, the Federal Reserve pushed ahead with its first interest rate cut since 2020, leading to gains in the tech-heavy Nasdaq Composite Index.

Neither Morgan Stanley nor Goldman Sachs, the two leading technology investment banks, are involved in the deal. Citigroup and Barclays are leading the offering.

The largest investor in Cerebras is venture capital firm Foundation Capital, followed by Benchmark and Eclipse Ventures. According to the documents, Alpha Wave, Coatue and Altimeter also each own at least 5%. Other investors include Sam Altman, CEO of OpenAI, and Andy Bechtolsheim, co-founder of Sun Microsystems. The only person who owns 5% or more is Feldman.

REGARD: Cerebras CEO: Our inference offering is 20x faster than Nvidia's and costs a fraction