For two years, stock investors wanting in on the frenzy around artificial intelligence have had only a few tech industry options: big companies like Microsoft and Nvidia. But that is set to change in the coming weeks with the market debut of Cerebras, a chip company with bold ambitions to take on Nvidia.
Cerebras, based in Sunnyvale, Calif., unveiled its investor prospectus on Monday, taking an important step toward listing its shares on the stock market. In doing so, the start-up aims to break the drought of hot I.P.O.s and take advantage of investor excitement for all things A.I.
Just 82 companies went public in the United States in the first half of the year, a slight uptick from last year, according to data collected by EY. Only 24 of them, including the social network Reddit and the data security company Rubrik, were venture-capital-backed start-ups. In May, Crunchbase News calculated that, at the current pace, it would take 49 years for all private start-ups based in the United States valued at $1 billion or more to go public.
Even though conditions to go public are good — interest rates are falling, and tech stocks are trading up — many companies have pushed I.P.O. plans to 2025, hoping to avoid any market volatility caused by the presidential election.
“It’s almost like a wait-and-see type of environment,” said Mark Schwartz, an I.P.O. advisory leader at EY.
Cerebras would be among the first A.I. companies to go public since OpenAI released its ChatGPT chatbot in late 2022. Tempus A.I., a health care company, and Astera Labs, a semiconductor company, both listed their shares this year.
There has been some concern that A.I. hype has far outpaced reality, with gloomy reports from the likes of Goldman Sachs and Sequoia Capital. But the demand for A.I. products continues to grow.
In August, Nvidia, which owns 90 percent of the market for chips used for A.I., reported that its revenue in the three months ending in July had more than doubled from a year earlier. Profits also jumped nearly threefold, though Nvidia’s stock has dropped about 11 percent since its peak in June.
Cerebras makes a specialized chip for building artificial intelligence technologies and delivering them to businesses and consumers.
The company revealed it brought in $136 million in revenue in the first six months of 2024, an increase of more than 15-fold from $8.6 million year earlier. It reported a loss of $67 million in the first six months of the year, a slight decrease from a loss of $78 million in the same period the year prior.
Andrew Feldman, Cerebras’s chief executive and co-founder, talked up his plans to take on Nvidia at a press event in August. When a reporter asked how much market share Cerebras could take from the industry leader, he quickly responded, “All of it.” He then amended his answer to say, “Enough to make them angry.”
Cerebras was founded in 2016 by Mr. Feldman along with Jean-Philippe Fricker, Michael James, Gary Lauterbach and Sean Lie. Like dozens of other start-ups, the company encountered a growing demand for chips by companies working on A.I. and began designing a new chip specifically for the market.
One challenge A.I. companies faced was connecting multiple sets of chips in a way that they could all work together. Such a setup uses lots of energy and can be slow to process information. Cerebras’s solution was to create a giant chip — around 56 times larger than those made by competitors — with the potential to crunch data much faster.
“Traditional strategy was take a big wafer, chop it up into little pieces, throw away the ones that had flaws on it,” Mr. Feldman said at the August press event.
Producing larger chips is harder and can wind up wasting precious silicon. Cerebras said it developed systems that allowed its chips to withstand flaws.
Cerebras began shipping its chips in 2019. The company raised $740 million in venture capital funding, valuing it at $4.1 billion. Benchmark, Eclipse Ventures and Foundation Capital are among its largest backers. The company also counts Sam Altman, the chief executive of OpenAI, as an investor.
In 2023, the company began building supercomputers for G42, an A.I. company based in Abu Dhabi. The relationship contributed to geopolitical tensions as the U.S. Commerce Department weighed whether to place trade restrictions on G42 because of its work with China’s military.
Cerebras’s prospectus said G42 represented 87 percent of its revenue in the first half of the year. G42 has committed to buy $335 million worth of Cerebras’s stock by April of next year, which will give it a stake larger than 5 percent.
In addition to Cerebras, other start-ups trying to grab a piece of the booming chip market include Graphcore, Groq and SambaNova Systems.
Nvidia has a two-decade head start. But big tech companies including Amazon and Microsoft have also started working on creating their own chips. Google has designed its own A.I. chips for more than a decade and it sells access to these chips, called Tensor Processing Units, or T.P.U.s, through its cloud computing services.
Cerebras aims to lure some of the pent-up demand to buy its processors, A.I. systems, software and supercomputers. Its pitch said that its large chips are able to “solve problems in less time and using less power” than other options.
The company’s prospectus warned of geopolitical risks, competition from the likes of Nvidia and others, and its reliance on Taiwan Semiconductor Manufacturing Company, the giant chip maker, to produce all of the wafers used in its products.
Cerebras plans to list its shares on the Nasdaq Stock Exchange under the symbol CBRS. Citigroup and Barclays banks will advise the company.
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