The shares of chip designer Cerebras Systems CBRS.O surged 89% above the IPO price during their debut on the Nasdaq, continuing the market’s strong interest in companies seen as major beneficiaries of the AI boom.
On Thursday, its stock opened at $350, well above the $185 IPO price, raising $5.55 billion for the company. This increase gave Cerebras a valuation of $106.75 billion on a fully diluted basis.
The IPO of this Sunnyvale, California-based company is the largest of the year to date, coming as AI-related stocks propel markets to record levels despite challenges from global growth concerns arising from the conflict in the Middle East.
Founded in 2015, Cerebras aimed to challenge conventional AI computing with its silicon wafer-scale engine, designing dinner plate-sized chips to accelerate processing. Unlike traditional systems relying on interconnected chip clusters, it integrates hundreds of thousands of compute cores on a single processor.
“In Silicon Valley, we understand the scope AI will take and what that means,” said Andrew Feldman, CEO of Cerebras, in an interview with Reuters. “We’re developing AI through learning and using it for inference. As these models get smarter, our utilization of them will explode.”
This IPO marks its second attempt at going public, after scrapping its listing plan last year. Its partnership with G42, an AI company based in the UAE that is expected to generate over 85% of its revenue by 2024, underwent a US national security review by the Committee on Foreign Investment. The committee eventually gave the green light to the operation.
Since then, Cerebras has gained Amazon AMZN.O and OpenAI as clients, two of the world’s largest AI infrastructure builders.
EXPLOSION OF AI SPENDING
As the race to develop faster and smarter AI models intensifies, technology giants are pouring hundreds of billions of dollars into this ecosystem.
This unprecedented demand has sparked a gold rush frenzy among investors, with AI-related stocks posting staggering returns in hopes that this revolutionary technology will disrupt traditional workflows.
The Dow Jones U.S. Semiconductors .DJUSSCT index, which tracks heavyweights in the semiconductor sector like Nvidia, Qualcomm QCOM.O, and Intel INTC.O, recorded a return of over 107% in the past year, compared to a rise of about 26% for the S&P 500 .SPX.
Cerebras raised the size and price range of its IPO earlier in the week to meet the growing demand for its shares. Sources told Reuters that the offer attracted orders for more than 20 times the number of available shares.
