Cerebras Systems, an AI chip startup backed by notable investors including OpenAI CEO Sam Altman, has filed for an IPO, aiming to challenge Nvidia’s dominance in the AI chip market with its WSE-3 chip, despite reporting significant losses amidst growing competition. (Source: Image by RR)

Sam Altman Joins Venture Giants in Supporting Cerebras’s $1.43B AI Chip IPO Push

AI chipmaker Cerebras Systems has filed for an initial public offering (IPO), planning to trade under the ticker symbol “CBRS” on the Nasdaq. The company aims to compete directly with industry giant Nvidia, offering its WSE-3 chip, which it claims has more cores and memory than Nvidia’s H100. In addition to selling chips, Cerebras provides cloud-based services powered by its computing clusters. Despite posting a net loss of $66.6 million in the first six months of 2024 on $136.4 million in sales, the company is positioning itself as a serious contender in the growing AI chip market, which is also crowded with competitors like AMD, Intel and Google.

Founded in 2016 and based in Sunnyvale, California, Cerebras was co-founded by CEO Andrew Feldman, who previously sold his startup SeaMicro to AMD for $355 million. Cerebras has grown steadily, with key customers like Group 42, a UAE-based AI firm, which accounted for 83% of the company’s revenue in 2023. According to a story in cnbc.com, the startup’s IPO follows a sparse year for tech IPOs, as high interest rates have pushed investors toward profitable assets, but recent moves by the Federal Reserve may help revive the market. Cerebras reported a $50.9 million net loss on $69.8 million in revenue in the second quarter of 2024, compared to a $26.2 million loss on $5.7 million in revenue during the same period in 2023.

The AI chip market is competitive, with major players like Nvidia and other tech giants such as Microsoft, Amazon and Google developing their own AI chips. While Cerebras’ WSE-3 chip is designed for AI training and running models, the company faces challenges, including potential supply chain disruptions, as its chips are manufactured by Taiwan Semiconductor Manufacturing Company. Cerebras warned that any interruptions could significantly impact their production and revenue growth. The company’s growing operating expenses, primarily due to personnel costs, reflect its efforts to support increased revenue and compete with larger, established companies.

Cerebras has attracted significant investment, including from venture firms Foundation Capital, Benchmark and Eclipse Ventures, along with notable individuals such as OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim. In May 2024, Group 42 committed to purchasing $1.43 billion worth of Cerebras products by March 2025, boosting investor confidence. The company’s valuation was pegged at over $4 billion in 2021, and its IPO marks a bold step in challenging the dominance of Nvidia and other competitors in the AI chip space. The offering is being led by Citigroup and Barclays, though notable investment banks like Morgan Stanley and Goldman Sachs are absent from the deal.

read more at cnbc.com