ETFs in Focus as Cerebras Methods Plans IPO Amid AI Chip Increase

Cerebras Methods is making ready to go public throughout a surge in synthetic intelligence (AI) expertise, aiming to turn into the primary chip maker to debut on this surroundings. The corporate just lately filed for an preliminary public providing (IPO) with the U.S. Securities and Trade Fee and plans to checklist on the Nasdaq underneath the ticker CBRS. Nevertheless, Cerebras has not but disclosed the timing or monetary particulars of the IPO.

If Cerebras Methods goes public, Cerebras Methods inventory could discover a place in semiconductor ETFs like VanEck Semiconductor ETF SMH, iShares Semiconductor ETF SOXX, First Belief Nasdaq Semiconductor ETF FTXL and SPDR S&P Semiconductor ETF XSD. Renaissance IPO ETF IPO may embody the Cerebras inventory in its portfolio.

Enterprise Mannequin and Aggressive Place

Cerebras “design(s) processors for AI coaching and inference,” the submitting stated, as quoted on investors.com. “We construct AI programs to energy, cool and feed the processors information. We develop software program to hyperlink these programs collectively into industry-leading supercomputers which can be easy to make use of, even for essentially the most difficult AI work.”

Cerebras markets its chips as options to NVIDIA’s NVDA AI-focused {hardware}. Whereas NVIDIA and different main gamers like Superior Micro Units AMD dominate the AI chip market, Cerebras has drawn some notable supporters, together with OpenAI CEO Sam Altman, who’s an investor. The corporate has skilled fast progress, reporting a income leap from $24.6 million in 2022 to $78.7 million in 2023. Within the first half of 2024, its revenues soared to $136.4 million, per barrons.com.

Any Problem?

Regardless of income features, Cerebras stays unprofitable, with a web lack of $127.2 million in 2023. This was an enchancment from its $177.7 million loss in 2022. The corporate continues to face challenges in buyer diversification, with its largest shopper, Abu Dhabi-based G42, making up 87% of its revenues within the first half of 2024.

One in every of Cerebras’ greatest hurdles is its restricted presence amongst U.S. tech giants like Microsoft, Amazon, Google, and Meta Platforms, who’re vital prospects of NVIDIA. Whereas Cerebras claims to be in discussions with massive U.S. hyperscalers, it has but to safe substantial offers on this house.

Competing With Nvidia

Cerebras faces stiff competitors from NVIDIA, which dominates the AI chip market by providing not simply chips however a full-stack resolution, together with supercomputers, processor connections, networking and essential software program for AI workloads.

IPO Market Circumstances

Cerebras’ resolution to go public comes throughout a sluggish restoration within the IPO market. Although IPO exercise has elevated in 2024, it stays beneath the highs of 2021. Regardless of this, we are able to anticipate AI-related companies to generate vital investor curiosity.

Any Future Risk to NVIDIA & AMD Shares?

Cerebras is banking on its third-generation Wafer-Scale Engine, the biggest chip ever offered, to tell apart itself from rivals. The corporate claims that the scale of its chip permits for extra environment friendly processing by decreasing the necessity for information motion, which is each time-consuming and power-hungry.

The corporate initiatives that the marketplace for AI-related chips and providers will develop from $131 billion in 2024 to $452 billion by 2027, per traders.com. Cerebras believes that its distinctive strategy and {hardware} will assist it seize a major market share from {industry} biggies like NVIDIA.

Backside Line

Cerebras Methods goals to create a distinct segment within the booming AI chip market, however it faces hurdles in scaling its enterprise and competing with {industry} giants like NVIDIA. Its success will depend upon securing a extra various buyer base.