Cerebras Systems Inc shares jumped 68 percent in its trading debut after raising US$5.5 billion in the year’s largest initial public offering (IPO), illustrating investors’ surging appetite for artificial intelligence (AI) data centers and the chips running them.
Shares of the Sunnyvale, California-based company pared earlier gains to close at US$311.07 in New York on Thursday, above the US$185 IPO price, after being halted earlier for volatility.
Cerebras’ first-time share sale raised nearly 60 percent more than its target when it launched and priced above a marketed range that was revised higher on Monday.
Photo:Bloomberg
The trading gave Cerebras a market value of US$67 billion, based on the outstanding shares in its filings.
Accounting for restricted shares, options and warrants, the company has a fully diluted value of about US$83 billion.
Investors are flooding into stocks of companies such as Cerebras that are set to benefit from the billions of dollars top hyperscalers have pledged to spend building out AI capabilities.
The firm is prepared to work hard on further developing its unique AI computing, aiming to take a place among the leading providers of technology in that lucrative market, Cerebras chief executive officer Andrew Feldman said.
It has the ability to quickly produce tokens, the basic units of data in large language models, Feldman said.
“We’re just at the beginning of AI being useful. And the more AI is useful, the more tokens are needed. And we make the fastest token,” Feldman told Bloomberg News in an interview.
The IPO is the biggest since Medline Inc’s US$7.2 billion offering in December last year, data compiled by Bloomberg showed.
It is also the largest ever semiconductor listing in the US, topping Arm Holdings PLC’s US$5.23 billion haul in 2023, the data showed.
The stock’s 68 percent first-day pop above the IPO price is the biggest since 2000 for a US listing raising more than US$4 billion, the data showed.
Cerebras’ IPO was more than 25 times oversubscribed, Feldman said.
The company sought to manage demand by telling institutional investors placing IPO orders to specify the number of shares and the maximum price they were willing to pay, Bloomberg News reported.
Arm Holdings PLC and its majority owner, Softbank Group Corp, made an approach to buy Cerebras weeks before its IPO, people familiar with the matter said earlier.
Cerebras is set to join a growing group of publicly traded chipmakers seeking to challenge market leader Nvidia Corp.
Cerebras makes large chips that help the bespoke computers that house them to crunch massive amounts of data.
Its hardware runs AI models faster than Nvidia, Feldman said.
The company has gained traction as the AI market increasingly focuses on more rapidly delivering answers to queries and running AI models at high speed. It is an area in which Nvidia is viewed as having less of a lock on the market, although the chip giant paid a reported US$20 billion for the technology and personnel of Cerebras rival Groq.
Cerebras is the fastest by “an order of magnitude,” Feldman said.
“We’re 15 times faster than the next nearest competitor and as AI has become useful, everybody wants it to be fast,” he said. “Nobody wants to wait.”
The company’s chips are already being used by OpenAI, which released its first model on Cerebras chips in February.
A deal with OpenAI earlier this year gave the ChatGPT maker 33.4 million warrants for Cerebras shares, some of which are subject to vesting conditions, including delivery dates for compute and the chipmaker’s market value exceeding US$40 billion, filings showed.
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