AI chipmaker Cerebras surges 70% in blockbuster IPO

Cerebras Systems made a stunning market debut on Thursday, with shares surging nearly 70% in the AI chipmaker's IPO, lifting the company to a market cap of approximately $95 billion. The San Jose, California-based company's opening day performance ranks among the largest in U.S. IPO history, following in the footsteps of only Alibaba and Facebook, which previously closed their first day of trading with valuations exceeding $100 billion. Cerebras also holds the distinction of being the largest IPO of the year and the biggest offering for a U.S. technology company since Uber went public in 2019. The company, which produces the Wafer Scale Engine 3 chip that it claims runs faster than Nvidia graphics processing units, signed a $20 billion deal with OpenAI earlier this year and has a partnership with Amazon Web Services. The enthusiasm surrounding Cerebras highlights a troubling reality for most other companies hoping to go public: the market has become increasingly dominated by AI-focused firms, leaving other sectors struggling for investor attention. SpaceX, OpenAI, and Anthropic, each valued near or above $1 trillion, are all in some stage of IPO preparation, with SpaceX expected to file its public prospectus as soon as next week, potentially becoming one of the 10 most valuable U.S. tech companies. BlackRock has reportedly discussed investing $5 billion to $10 billion in SpaceX's IPO. Venture capitalists report that late-stage startups are in a period of "pragmatic preparation," and many non-AI companies, particularly software-as-a-service firms facing AI replacement concerns, are finding it nearly impossible to generate public market interest. U.S. venture-backed exit value last year was less than one-third the peak in 2021, according to the National Venture Capital Association. Behind Cerebras' current success lies a harrowing near-death experience in 2019, when the three-year-old company had burned through nearly $200 million attempting to solve a technical problem that the entire semiconductor industry considered impossible: packaging a chip the size of an entire silicon wafer. Founder and CEO Andrew Feldman described walking to board meetings every few weeks to report another failure while spending approximately $8 million monthly, knowing the company would die without a solution. The chips were 58 times larger than standard processors and required 40 times as much power, forcing Cerebras to invent its own machines and develop entirely new cooling and data delivery systems. The company finally achieved a working chip in July 2019. OpenAI, which previously explored acquiring Cerebras, is now both a customer and a partner, having loaned the company $1 billion secured by warrants that conditionally grant roughly 33 million shares worth over $9 billion at the current closing price.