Cerebras Systems Files for IPO, Showcasing Strong Revenue Growth in AI Chip Market

Cerebras files for IPO, shows rapid revenue growth and declining losses

On Tuesday, Cerebras Systems, the company primarily known for wafer-scale processors for AI, filed for an IPO on the Nasdaq under the symbol CBRS. Cerebras, which offers both servers based on its Wafer Scale Engine 3 processors as well as cloud services (sometimes in partnership with giants like Group 42) revealed financial results for its recent years and it appears that company revenues are increasing, while its losses are decreasing. A great time for an IPO. Cerebras's valuation is currently unclear. Back in 2022, the Cerebras's total revenue comprising of hardware sales and services, was $24.62 million, whereas its loses topped $177.7 million. The company increased its revenue to $78.74 million in 2023 and shrank its losses to $127.15 million in 2023. This year, Cerebras's revenue skyrocketed to $136.4 million in the first half alone, whereas its losses dropped further to $66.60 million. Revenue growth has primarily been driven by the UAE Group 42 (aka G42), a UAE-based AI firm that accounted for 83% of Cerebras's revenue in 2023 and 87% of the company's revenue in the first half of 2024. In a deal signed in May 2024, Group 42 committed to purchasing $1.43 billion worth of Cerebras products by March 2025. Group 42 currently holds less than 5% of Cerebras's Class A shares but may acquire more based on the volume of future purchases. Relying on essentially one big customer, based in the UAE, a country which is under U.S. export restrictions, is a risk and Cerebras makes no secrets of that. "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," a statement by Cerebras reads. "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." The company competes both against AI giant Nvidia as well as other supporters of AI processors, such as AMD and Intel. The main advantage of Cerebras's Wafer Scaling Engine (WSE) processors is high-bandwidth low-latency on-wafer interconnect that optimizes both performance and power consumption. While it is hard to produce wafer-scale processors, their performance, power efficiency, and bandwidth promise to ensure that Cerebras will have a special place on the market due to unique advantages.

Cerebras reveals revenue surge in US IPO filing, aims to challenge Nvidia in AI chip market

Cerebras Systems, a startup competing with industry leader Nvidia for a slice of the lucrative AI chip market, said late on Monday its revenue surged more than threefold in 2023, in a filing to go public in the U.S. Initial public offerings in the U.S. have bounced back in 2024 after a two-year dry spell, driven by growing hopes of a soft landing and stocks trading at record highs. Analysts see more gains ahead as investor sentiment improves and expect AI firms to lead the charge for tech listings. Cerebras' revenue surged to $78.7 million in the 12 months ended Dec. 31 versus $24.6 million a year earlier. Loss narrowed to $2.92 per share compared with $4.28 apiece. The company said 83% of its total annual revenue came from AI tech group G42, which is partly owned by Abu Dhabi's sovereign investor Mubadala. In the IPO prospectus, Cerebras listed its commercial relationship with G42 among the key factors that can affect its performance. Citigroup and Barclays are the lead underwriters of the offering. It is looking to list on the Nasdaq and trade under the ticker symbol "CBRS". While Cerebras is yet to reveal the terms of its IPO, Bloomberg News, citing sources, reported late last month it could seek to raise up to $1 billion. AI RACE The Silicon Valley startup will seek out investors for the share sale at a time when investor enthusiasm for all AI-linked chip companies remains robust. In its IPO prospectus, Cerebras said it expects the AI computing market to grow to $453 billion in 2027 from $131 billion in 2024. "It seems fair to suggest that we could see a new wave of tech companies coming to market, given previous appetite for innovation among investors in the States," Dan Coatsworth, investment analyst at AJ Bell, told Reuters. "Anything AI-related should have an easy story to tell and investors love a good narrative when they're seeking new opportunities." Nvidia's stock has seen a monster rally this year, surging around 140%, solidifying its position as one of the world's most valuable companies. Its advanced hardware helps OpenAI develop the underlying software that powers apps such as ChatGPT. Cerebras is betting its roughly foot-wide chip can outperform Nvidia's hardware, which is a cluster of thousands of chips stitched together. In August, Cerebras launched a tool for AI developers that allows them to access the startup's outsized chips to run applications, which it said was a much cheaper option than Nvidia processors.