Cerebras Systems Inc.'s stock surged 75% on its first day of trading, following the year's largest initial public offering (IPO), which raised $55.5 billion. This demonstrates strong investor interest in artificial intelligence data centers and the chips that power them.
At 2:49 p.m. New York time on Thursday, the stock moderated its gains, trading at $324, still well above its $185 IPO price. Trading had been temporarily halted earlier due to volatility. Based in Sunnyvale, California, Cerebras's IPO proceeds exceeded its initial target by nearly 60%, with the final pricing set above an upwardly revised range announced earlier in the week.
Based on the shares outstanding listed in regulatory filings and the first-day trading price, Cerebras's market capitalization reached $69.7 billion. On a fully diluted basis, including letter stock, options, and warrants, the company's valuation approximates $86 billion.
Investors are flocking to stocks of companies like Cerebras, seen as beneficiaries of massive investments by top-tier hyperscale cloud service providers building out their AI capabilities.
Andrew Feldman, co-founder and CEO of Cerebras Systems Inc., stated that the company is prepared to continue advancing its unique AI computing technology, aiming to become a leading provider in this lucrative market. He emphasized the company's ability to generate tokens—the fundamental data units in large language models—faster than competitors.
"AI is just beginning to become useful. The more useful AI becomes, the more tokens are required. We generate tokens the fastest," Feldman remarked in an interview on Thursday.
Data indicates this IPO is the largest since Medline Inc.'s $72 billion offering last December. It also marks the largest semiconductor company listing in U.S. history, surpassing the $52.3 billion raised by Arm Holdings Plc in 2023.
The stock opened at $350, an 89% premium to its IPO price. For listings raising over $20 billion, this represents the largest first-day pop since 2000.
At the $185 per share offering price, Feldman's stake in Cerebras is valued at $1.9 billion.
Cerebras joins a growing roster of listed chipmakers challenging market leader Nvidia. The company manufactures large-scale chips designed to power custom computers capable of processing vast datasets. Feldman claims the company's hardware runs AI models faster than Nvidia's.
As the AI market increasingly prioritizes faster query responses and high-speed model inference, Cerebras has garnered significant attention. This is seen as an area where Nvidia's market dominance is less entrenched, despite reports that the chip giant spent $20 billion to acquire technology and personnel from Cerebras rival Groq. Last month, Alphabet Inc.'s Google also announced a product targeting the inference market.
"Fast inference will become a fundamental component of the inference market. We have an opportunity to capture a meaningful portion of it. We must execute flawlessly. We still have a lot of work to do," Feldman stated.
The CEO asserted in the interview that Cerebras operates "an order of magnitude" faster than any other company.
OpenAI is already utilizing Cerebras's chips. In February, OpenAI released its first model running on Cerebras hardware. Regulatory filings show that a deal struck with OpenAI earlier this year granted the ChatGPT developer 33.4 million warrants for Cerebras stock. The vesting of some of these warrants is contingent upon meeting compute delivery timelines and the chipmaker achieving a market capitalization exceeding $40 billion.
U.S. IPO activity has significantly intensified ahead of a potential listing for Elon Musk's SpaceX. If SpaceX proceeds with its target to raise $750 billion, it would become the largest listing in history. Data compiled by Bloomberg shows the value of initial stock offerings on U.S. exchanges has more than doubled. Excluding blank-check companies, closed-end funds, and real estate investment trusts (REITs), IPOs have raised $27.4 billion this year, compared to $11.7 billion during the same period last year.
