Cerebras pops 89% in Nasdaq IPO debut, hits $106B valuation amid AI frenzy

Cerebras Systems made a thunderous entrance onto the public markets Thursday, with shares soaring 89% above their IPO price in one of the biggest signs yet that Wall Street’s appetite for artificial intelligence remains far from cooling down.

The AI chip startup opened at $350 per share on Nasdaq after pricing its IPO at $185, giving the company a fully diluted valuation of roughly $106.75 billion. By the close of trading, the stock settled at $331.07, still up 68% from its offering price, enough to push Cerebras’ market cap to near $95 billion.

The company raised $5.55 billion after selling 30 million shares, marking the largest IPO by a U.S. tech company since Uber went public in 2019, CNBC reported.

The debut comes at a time when investors are pouring money into nearly anything related to AI infrastructure. Chipmakers, cloud providers, and data center firms have become some of the market’s hottest trades as tech giants race to build the computing backbone needed to train and run advanced AI models.

Founded in 2015 and based in Sunnyvale, California, Cerebras built its reputation around a bold idea: to make AI chips dramatically larger rather than packing workloads across clusters of smaller processors. Its flagship Wafer Scale Engine 3 uses an entire silicon wafer as a single processor, creating a chip roughly the size of a dinner plate.

The company says the approach delivers faster performance than traditional GPU systems in certain AI workloads, especially inference, where AI models generate responses for users in real time.

That pitch has helped Cerebras attract major customers, including OpenAI and Amazon, both of which are spending aggressively on AI infrastructure as competition intensifies across the industry.

“In Silicon Valley, we understand just how big AI will be, and what that means,” Cerebras CEO Andrew Feldman told Reuters in an interview. “We make AI with training, and we use it with inference. As these models get smarter, the amount we use them will explode.”

Feldman’s stake is now worth an estimated $3.2 billion following the IPO. CTO Sean Lie holds shares valued at roughly $1.7 billion.

Still, not everyone is convinced the company can justify its sky-high valuation over the long haul.

Analysts at investment banking group Davidson described Cerebras’ technology as “niche-y” ahead of the company’s debut and warned that the wafer-scale architecture remains in the “early stages of maturity.”

“The Cerebras IPO may be well received, but after reading the S1 and watching the roadshow, we wouldn’t get too excited,” the analysts said.

The firm argued that Cerebras may deliver faster speeds in certain use cases, though its systems lack the flexibility of more established AI chip ecosystems led by Nvidia.

Questions around concentration risk have followed the company for months. More than 85% of Cerebras’ 2024 revenue came from G42, a UAE-based AI company whose relationship with Cerebras had previously drawn scrutiny from U.S. regulators over national security concerns. Federal officials later cleared the partnership.

Investor enthusiasm has remained difficult to ignore.

The IPO attracted demand for more than 20 times the number of shares available, Reuters reported, citing sources. The company had already raised its IPO price range earlier in the week after interest from institutional investors surged.

Nicholas Smith, senior research analyst at Renaissance Capital, said the IPO valuation looked “reasonable” at the $185 offering price based on projected 2028 sales and EBITDA metrics.

“At the current price,” Smith said, “it is quite high even out to 2028.”

The listing comes as spending on AI infrastructure continues to explode across Silicon Valley. Tech giants are expected to spend hundreds of billions of dollars this year on chips, servers, networking gear, and data centers tied to artificial intelligence.

That frenzy has fueled massive gains across semiconductor stocks. The Dow Jones U.S. Semiconductors Index, which includes companies such as Qualcomm, Intel, and Nvidia, has climbed more than 107% over the past year, far outpacing the broader market.

Cerebras CEO