Cerebras targets $26.6 billion valuation in US IPO as AI chip demand surges

By Echo Wang, Manya Saini and Pritam Biswas

May 4 (Reuters) – Nvidia-rival Cerebras is seeking a valuation of as much as $26.62 billion in its U.S. initial public offering, as heavy spending on AI infrastructure lifts demand for advanced chips and fuels investor appetite for the sector.

Sunnyvale, California-based Cerebras is aiming to sell 28 million shares in the offering, priced between $115 and $125 apiece to raise $3.50 billion in the company’s second attempt to go public after withdrawing a previous IPO filing last October.

The company is known for its wafer-scale engine chips, designed to speed up the training and inference of large AI models, placing it in direct competition with Nvidia and other AI hardware firms.

“By bringing massive compute and memory onto a single piece of silicon and integrating it into a purpose-built system and software stack, we deliver exceptional AI speed for customers on premises and via the cloud,” Cerebras said.

The surge in AI adoption has set off a sharp rise in demand for the high-performance chips needed to train and run complex models, turning semiconductors into a key bottleneck in the technology supply chain.

As companies race to build out AI infrastructure such as data centers and cloud services, chipmakers have emerged as some of the biggest beneficiaries, with Nvidia leading the pack.

“Nvidia remains dominant as the market leader for AI inference as well as training infrastructure, however, Cerebras is pitching the idea that there is room for specialist chip companies if they can offer clear speed or cost advantages,” IPOX Research Associate ​Lukas Muehlbauer said.

Earlier this year, Cerebras raised $1 billion in a late-stage funding round, led by tech-investing giant Tiger Global, that valued it at $23 billion. Other high-profile backers of the round included Benchmark, Fidelity Management Altimeter, AMD, and Coatue.

It also struck a multi-year deal with OpenAI valued at more than $20 billion, under which the ChatGPT-parent agreed to deploy 750 megawatts of Cerebras’ high-speed AI compute.

IPO MARKET TAILWINDS

The IPO market has picked up pace again, as investor concerns over Middle East tensions take a back seat and equities trade near record highs.

Analysts say sectors such as AI and financials are set to stand out, as they remain relatively insulated from supply chain disruptions and pricing pressures stemming from oil market volatility.

A pure-play AI IPO of this scale will likely serve as a test of investor demand for the broader ecosystem, as markets gauge appetite for companies tied directly to the buildout of AI infrastructure.

“Cerebras is an important signal deal for the IPO market as a test of whether public investors are ready to fund high-growth AI infrastructure companies after a softer start to the year,” Muehlbauer said.

“There is also a race to get deals done before SpaceX. The SpaceX IPO will be so large and high-profile that there are concerns it could absorb a lot of investor attention and capital.”

Elon Musk’s SpaceX filed to go public in New York last month.

Cerebras’ revenue rose to $510 million in the year ended December 31, up from $290.3 million a year earlier. It also reported a profit of $1.38 per share, a turnaround from a loss of $9.90 per share a year earlier.

Morgan Stanley, Citigroup, Barclays and UBS are the lead underwriters for the offering.

(Reporting by Echo Wang in New York and Rhea Rose Abraham and Pritam Biswas in Bengaluru; Editing by Sherry Jacob-Phillips and Devika Syamnath)