Cerebras Files for IPO, Challenging Nvidia's AI Chip Dominance

Is This Company an "Nvidia Killer?" What to Know About Cerebras' IPO | The Motley Fool

This start-up's CEO says he's eyeing "all of" Nvidia's market share. Conventional wisdom is that Nvidia (NVDA 1.69%) will continue to dominate the artificial intelligence (AI) chip market, as it has since the introduction of ChatGPT. Yet, there's a barrage of competition coming not only from merchant competitors and cloud giants producing their own in-house accelerators but also from AI chip start-ups. One such start-up, Cerebras, just filed a prospectus ahead of an impending initial public offering (IPO). After reading, I think Cerebras is a name every Nvidia investor should monitor closely. But is it really a threat to the graphics processing unit (GPU) giant? Cerebras was founded in 2016 by current CEO Andrew Feldman and a group of technologists who had founded and/or worked at a company called SeaMicro over a decade ago. SeaMicro made efficient high-bandwidth microservers and was later acquired by Advanced Micro Devices in 2012. Cerebras sold its first AI chips in 2019 and has recently seen a big acceleration in demand, leading to this recent IPO filing. Cerebras' big differentiator is that its AI chips, which it calls wafer-scale engines (WSEs), are huge. And by huge, we're talking a chip that takes up an entire semiconductor wafer. A foundry usually produces many chips per wafer, some of which have defects and are discarded. But Cerebras goes for one giant chip per wafer. The result is a massive processor 57 times larger than an Nvidia GPU, with 52 times more compute cores, 880 times the on-chip memory, and 7,000 times more memory bandwidth. One Cerebras WSE has a remarkable 4 trillion transistors -- that's 50 times the 80 billion transistor count of Nvidia's H200! Like Nvidia, Cerebras' chips are produced by Taiwan Semiconductor Manufacturing. The theory behind making a giant chip is that by doing more processing on the chip, the WSE does away with the need for the Infiniband or Ethernet-based networking connections that string hundreds or thousands of GPUs together. According to Cerebras, this architecture allows WSEs to achieve over 10 times faster training and inference than an 8-GPU Nvidia system. In a recent interview, Feldman said recent tests showed Cerebras chips were 20 times faster for inference than Nvidia's. Sound impressive? When Feldman was asked at a summer conference how much market share Cerebras planned to take from Nvidia, he answered, "All of it." Not only does Cerebras talk a big game, but it's also shown impressive revenue acceleration and improving profitability this year, as you can see: Data source: Cerebras S-1. H1 = first half of the corresponding year. As you can see, between the first half of 2023 and the first half of 2024, Cerebras' revenue jumped a whopping 1,474%. While gross margin technically declined, from 50.5% to 41.1%, that was mainly because virtually all of last year's revenue came from higher-margin services. Cerebras' hardware gross margins actually went up over that time. Even better, operating losses narrowed by $40 million, a great indication that the company will be profitable if it scales. That exponential scaling should continue into next year. According to the filing, Cerebras' largest customer, Abu Dhabi's G42, agreed to purchase $1.43 billion of equipment through the end of 2025. That's sixfold growth over the current 2024 run rate. There are a couple of risks to the Cerebras story, however. One is that producing one massive chip can lead to lots of defects. Whereas Nvidia or any other chipmaker can throw out all the bad chips on a wafer, Cerebras has to take the whole thing, opening its WSEs to imperfections. To get around this, Cerebras says it has created "redundant" cores and interconnects on its chips, as Cerebras assumes many chips will have defects. "Flaws are designed to be recognized, shut down, and routed around," the filing says. However, building redundancy also means Cerebras can't get all the potential the surface area of its chip could otherwise get. Obviously, management believes the "big chip" architecture more than makes up for this inefficiency. A second risk, and likely the biggest, is Cerebras' customer concentration. Right now, AI company G42 from the United Arab Emirates accounts for 87% of Cerebras' sales in the first six months of 2024. G42 and affiliated entities are also behind next year's $1.43 billion order, meaning that concentration will only grow. Concentration is somewhat expected in the early stages of a company's growth. But should anything go wrong with the relationship or G42 itself, it could seriously derail Cerebras' plans. G42's close affiliation with a foreign government -- the UAE's national security advisor is the company's founder and largest shareholder -- certainly poses a risk should there be a geopolitical flare-up. When it goes public, Cerebras will be a new AI player on the block and will probably sell for a high valuation. So, investors should be cautious about how much they pay for the stock when it comes to market. Nevertheless, the company has a differentiated architecture from the rest of the pack. Therefore, it's certainly worth watching whenever it goes public -- especially if you're a big Nvidia or AMD shareholder.

Nvidia Faces New Competition: Cerebras Files for IPO, Huawei Pushes AI Chips - NVIDIA (NASDAQ:NVDA)

Analysts warn of AI investment hype as Nvidia delays Blackwell GPUs and Cerebras Systems files for IPO, eyeing competition. Accelerated computing and artificial intelligence stock Nvidia Corp NVDA has been up over 171% in the last 12 months. However, Gil Luria of DA Davidson flagged Nvidia's dependence on four customers, which could include hyperscalars Microsoft Corp MSFT, Meta Platforms Inc META, Amazon.Com Inc AMZN, and Google parent Alphabet Inc GOOG GOOGL considering in-house chip developments by the tech giants. Analysts had also highlighted the AI frenzy as overhyped, raising questions over the sustainability of the colossal investment further intensified by Nvidia's delays in product releases like its Blackwell GPUs. Also Read: AMD Chief Predicts Custom Chips Will Outperform GPUs, Sees Shift in AI Chip Demand: Report The AI wave is prompting several companies to tap the growth by catering to industries ranging from gaming to professional visualization, data centers, and automotive. On Monday, Cerebras Systems Inc filed for an initial public offering with the SEC. CS-3, Cerebras' flagship system, can handle AI computing workloads and power AI supercomputers. It proposes to compete with Nvidia. The AI computing firm's sales reached $136.4 million in the first six months of 2024, up from $8.7 million a year ago. Cerebras filed confidentially for the IPO in August, Bloomberg reports. Cerebras reported a net loss of $66.6 million, down from $77.8 million a year ago. Group 42 Holding accounted for 87% of its revenue for the first half of 2024. According to a Bloomberg report, Cerebras could raise up to $1 billion at a valuation of $7 billion to $8 billion. In China, Huawei Technologies is offering Ascend 910C processor samples to Chinese hyperscalars, which are Nvidia customers, SCMP reports. China pushed its companies to reach out to domestic AI chips from companies like Cambricon Technologies Corp and Huawei Technologies Co as it retaliates against the US's advanced semiconductor tech sanctions. Price Action: NVDA stock is down 1.19% at $120.01 at the last check on Tuesday. Also Read: Michael Dell Sells $1.2B Worth Of Dell Stock, Reducing Stake Amid Company's Recent S&P 500 Inclusion And AI Expansion Image via Shutterstock Market News and Data brought to you by Benzinga APIs

Cerebras, an AI chipmaker trying to take on Nvidia, files for an IPO

Cerebras, based in Sunnyvale, California, unveiled its investor prospectus on Monday, taking an important step toward listing its shares on the stock market. In doing so, the startup aims to break the drought of hot IPOs and take advantage of investor excitement for all things AI.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, California, unveiled its investor prospectus on Monday, taking an important step toward listing its shares on the stock market. In doing so, the startup aims to break the drought of hot IPOs and take advantage of investor excitement for all things AI. 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 startups. In May, Crunchbase News calculated that, at the current pace, it would take 49 years for all private startups 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 IPO 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 IPO advisory leader at EY. Cerebras would be among the first AI companies to go public since OpenAI released its ChatGPT chatbot in late 2022. Tempus AI, a health care company, and Astera Labs, a semiconductor company, both listed their shares this year. There has been some concern that AI hype has far outpaced reality, with gloomy reports from the likes of Goldman Sachs and Sequoia Capital. But the demand for AI products continues to grow. In August, Nvidia, which owns 90% of the market for chips used for AI, 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% since its peak in June. Cerebras makes a specialized chip for building artificial intelligence technologies and delivering them to businesses and consumers.

Cerebras Files for IPO as It Challenges Nvidia in AI Chipmaking

(Bloomberg) -- Cerebras Systems Inc., a startup that looks to challenge Nvidia Corp. in artificial intelligence computing, has filed for an initial public offering. In a filing with the US Securities and Exchange Commission Monday, Cerebras disclosed details of its finances and operations ahead of an IPO, after filing confidentially in August. The Sunnyvale, California-based firm recorded a net loss of $66.6 million on $136.4 million in revenue for the six months ended June 30, compared with the $77.8 million net loss on $8.7 million in revenue in the year-earlier period, the filing shows. Cerebras and the selling shareholders won't disclose proposed terms for the share sale, including the company's valuation in a listing, until a later filing. A listing could raise as much as $1 billion at a $7 billion to $8 billion value, Bloomberg News has reported. CS-3, Cerebras' flagship system, is optimized to handle AI computing workloads and can be clustered together to power AI supercomputers, according to the company's website. Founder and Chief Executive Officer Andrew Feldman said his company's chips and the computing systems equipped with them will upend the AI computing industry. The tens of billions of dollars poured into running AI models and generating responses have so far benefited Nvidia's graphics processing units, or GPUs, the most. Cerebras products are used by corporations, research institutions and governments to develop proprietary models and train open-source models, the filing shows. The company raised $250 million in a series F financing round in 2021, valuing it at more than $4 billion, according to a statement at the time. The round was led by Alpha Wave Ventures, Abu Dhabi Growth Fund and G42. Cerebras' investors include Altimeter Capital, Benchmark Capital and Coatue Management, the statement showed. The offering is being led by Citigroup Inc. and Barclays Plc. The company plans for its shares to trade on the Nasdaq Global Market under the symbol CBRS.

Cerebras, an A.I. Chipmaker Trying to Take On Nvidia, Files for an I.P.O.

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.

A test case of the AI frenzy

Nvidia sits at the centre of what we've dubbed the AI-financial complex, but there are a lot of people that want to make bank from the market frenzy. Cerebras Systems has now filed for an IPO, and it will be an interesting test of just how AI-mad investors have become. As mainFT quoted a VC as saying in a round-up of pretenders for Nvidia's throne last month: There has been a near insatiable desire from public investors to find and back the next Nvidia. This isn't just about chasing the latest trend. The momentum is also benefiting several VC-funded chip start-ups that have been toiling away for nearly a decade. As a result, the valuations are appropriately punchy. Bloomberg reported last week that the Silicon Valley-based maker of chips optimised for artificial intelligence was hoping to raise $1bn at a valuation of $7bn to $8bn, for a company that was started in 2016 and only began generating any revenue in 2019. But Cerebras's pitch is pretty transparent: by FT Alphaville's count the summary prospectus alone contains 142 mentions "AI". We gave up counting the rest of the S-1 filing. It's core product is a wafer-sized chip . . . . . . which Cerebras says leads to vastly more memory and faster computing than with other commercially available GPUs. This enables Cerebras customers to solve problems in less time and using less power. Our AI compute platform combines processors, systems, software, and AI expert services, to deliver massive acceleration on even the largest, most capable AI models. It substantially reduces training times and inference latencies, while reducing programming complexity. We're not even going to try to judge the tech here. FTAV is primarily a financial blog and, luckily, there's a lot there to dig into. For example, revenues more than tripled in 2023 to $78.7mn, and climbed to $136.4mn in the first six months of 2024. But that still means the company remains deeply unprofitable, with a net loss of $66.6mn so far this year, roughly the same annualised run rate as in 2023 (Sorry for terrible size, zoomable version here) Another thing that jumped out was Cerebras admitting in its risk disclosures that "we currently generate a significant majority of our revenue from one customer, G42, and a significant portion of our revenue from a limited number of customers". And by significant, Cerebras really does mean SIGNIFICANT, and rising. From the filing, with FT Alphaville's emphasis below: Group 42 Holding Ltd (together with its affiliates, "G42") accounted for 83% and 87%, respectively, of our total revenue for the year ended December 31, 2023 and six months ended June 30, 2024. Our dependence on our relationship with G42 subjects us to a number of risks. Any negative changes in the demand from G42, in G42's ability or willingness to perform under its contracts with us, in laws or regulations applicable to G42 or the regions in which it operates, or in our broader strategic relationship with G42 would harm our business, financial condition, results of operations, and prospects. Even if G42 remains satisfied with our offerings, it is possible that it will no longer need to purchase additional AI compute or services at the same quantity as prior periods, or that G42's ability to purchase our products may change for reasons outside of its control. G42 may also choose to purchase more of its AI compute from our competitors. Further, as of December 31, 2023, customers representing 10% or more of total accounts receivable consisted of four customers (including G42) who accounted for 43%, 22%, 15%, and 15% of our accounts receivable balance. Two customers accounted for 68% and 16%, respectively, of our accounts receivable balance as of June 30, 2024. This customer concentration increases the risk of quarterly fluctuations in our results of operations and our sensitivity to any material adverse developments experienced by, or in our relationships with, our significant customers. The loss of, any substantial reduction in sales to, or the default on payments by, any of our significant customers may harm our business, financial condition, results of operations, and prospects. So what is the blandly named G42? An AI company based in Abu Dhabi, the capital of the United Arab Emirates, which invested heavily in Cerebras's 2021 series F and received a somewhat controversial $1.5bn slug of investment from Microsoft earlier this year. The US has slapped export controls on AI tech that might be passed on to the likes of China, and it seems like the Cerebras chips that it has bought are actually being used in the US, which sounds awkward. Again, our emphasis below: While we have obtained an export license from BIS to export, reexport, or transfer (in-country) our CS-2 systems to G42 in the United Arab Emirates, all of the systems we have sold to G42, or for which purchase orders have been placed by G42, to date have been or are expected to be deployed in the United States, which does not require an export license from BIS. To the extent that we cannot export to a specific customer without a license from BIS, we may seek a license for the customer. However, the licensing process is time-consuming. There is no assurance that BIS will grant such a license or that BIS will act on the license application in a timely manner. Even if BIS issues a license, it may impose burdensome conditions that we or our customer cannot accept or decide not to accept. So this is a fast-growing but extremely unprofitable company utterly dependent on selling its products to one of its biggest investors, which might not be able to take them out of the country?

AI chipmaker Cerebras files for IPO

Andrew Feldman, co-founder and CEO of Cerebras Systems, speaks at the Collision conference in Toronto on June 20, 2024. Artificial intelligence chip startup Cerebras Systems on Monday filed its prospectus for an initial public offering, with plans to trade under the ticker symbol "CBRS" on the Nasdaq. Cerebras competes with Nvidia, whose graphics processing units are frequently chosen for training and running AI models. Cerebras says on its website that its WSE-3 chip comes with more cores and memory than Nvidia's popular H100. The Cerebras component is also much larger in size. In addition to selling chips, Cerebras offers cloud-based services that rely on its own computing clusters. It's a growing and crowded market: Cloud providers Amazon, Google and Microsoft have developed their own AI chips. The company said that Group 42, an UAE-based AI firm that counts Microsoft as an investor, accounted for 83% of the company's revenue last year. According to the filing, Cerebras had a narrowing net loss of $77.8 million in the first six months of 2024 on $136.4 million in sales. For 2023, the company reported a net loss of $127 million on revenue of $78.7 million. Cerebras was founded in 2016 and is based in Sunnyvale, California. Andrew Feldman, the startup's co-founder and CEO, sold server startup SeaMicro to AMD for $355 million in 2012. The company said in 2021 that it was valued at over $4 billion in a $250 million funding round. Investors include the Abu Dhabi Growth Fund, Altimeter Capital, Benchmark, Coatue, Foundation Capital, OpenAI CEO Sam Altman and Sun Microsystems co-founder Andy Bechtolsheim. The technology IPO market has generally been 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 rate cut since 2020, prompting gains in the tech-heavy Nasdaq Composite index.

Nvidia rival Cerebras Systems files to go public - SiliconANGLE

Cerebras Systems Inc., a startup that sells a wafer-sized chip for artificial intelligence applications, today filed to go public. The move is not unexpected. Cerebras submitted a confidential draft version of the filing to the Securities and Exchange Commission in July. Last week, Bloomberg reported that the company hopes to raise between $750 million and $1 billion in its initial public offering at a valuation of up to $8 billion. Cerebras' flagship product is an AI chip called the WSE-3 that features four trillion transistors. Those transistors are organized into nearly one million cores and 44 gigabytes of high-speed SRAM memory. According to Cerebras, the chip has about 50 times more cores and 880 times more memory than the largest commercially available graphics card. The company says that the WSE-3 can help customers train AI models faster than would be possible using traditional chips. Moreover, it's promising to unlock power-efficiency improvements. Advanced AI models typically run on multiple graphics processing units. In both training and inference projects, those GPUs must regularly exchange data with one another. The speed at which information travels between the individual chips directly affects the overall AI cluster's performance: the faster a piece of data reaches a GPU, the sooner that processing can begin. Data movement also factors into computing clusters' power consumption. Transferring information between GPUs consumes a significant amount of electricity, particularly in large AI environments with upwards of thousands of chips. Cerebras' WSE-3 makes AI clusters more efficient by reducing data movement. The chip's high transistor count allows it to run large AI models that would otherwise have to be spread across multiple graphics cards. When an entire neural network runs on a single WSE-3, there's no need to move data between GPUs deployed in different parts of a server rack. Cerebras ships the WSE-3 with a compute appliance called the CS-3 that is about the size of a mini fridge. The system combines a single WSE-3 with cooling equipment, power delivery modules and other auxiliary components Customers can deploy up to 2,048 CS-3 appliances in a single AI cluster. Cerebras has not yet turned a profit but is experiencing rapid revenue growth. From 2022 to 2023, its sales more than tripled to $78.7 million. Cerebras' momentum continued into 2024, helping it generate $136.4 million during the first six months of the year alone. In today's IPO filing, the chipmaker detailed that it plans to maintain that revenue growth by acquiring more customers and enhancing its technology. The latter effort will place an emphasis on developing "new products and form factors." The filing pointed to Cerebras' recently launched cloud service for inference workloads as another potential source of revenue growth. The chipmaker plans to list its shares on the Nasdaq under the ticker symbol "CBRS." Citigroup and Barclays are the leader underwriters.

Cerebras Files for IPO as It Challenges Nvidia in AI Chipmaking

Cerebras Systems Inc., a startup that looks to challenge Nvidia Corp. in artificial intelligence computing, has filed for an initial public offering. In a filing with the US Securities and Exchange Commission Monday, Cerebras disclosed details of its finances and operations ahead of an IPO, after filing confidentially in August.

AI chip firm Cerebras files for US IPO

(Reuters) -Artificial intelligence chip firm Cerebras Systems on Monday filed for an initial public offering in the United States. The float will test market appetite for AI-linked stocks, after concerns of excessive euphoria around the sector prompted some investors to rotate out of technology stocks and into value shares earlier this year. Cerebras will list on the Nasdaq Global Market under the symbol "CBRS". (Reporting by Pritam Biswas in Bengaluru; Editing by Devika Syamnath)

Cerebras Systems Files for Proposed IPO By Investing.com

Cerebras Systems (CBRS) has filed for a proposed IPO. The company describes itself as: "Cerebras is an AI company. We design processors for AI training and inference. We build AI systems to power, cool, and feed the processors data. We develop software to link these systems together into industry-leading supercomputers that are simple to use, even for the most complicated AI work, using familiar ML frameworks like PyTorch. Customers use our supercomputers to train industry-leading models. We use these supercomputers to run inference at speeds unobtainable on alternative commercial technologies. We deliver these AI capabilities to our customers on premise and via the cloud."