Cerebras’ blockbuster IPO boosts hype for SpaceX, OpenAI, Anthropic

Cerebras Systems‘ This week’s noisy IPO gave investors a glimpse of what’s to come in artificial intelligence. But it was also a reminder of how difficult it is for non-AI companies to attract Wall Street’s attention.

Shares of the artificial intelligence chip maker soared nearly 70% in its market debut on Thursday, pushing the company’s market value to nearly $95 billion. There are only two tech companies that closed their first day of U.S. trading at a valuation of $100 billion or more: Alibaba’s And Facebook.

Cerebras also holds the title of being the largest IPO of the year and the largest offering for a US technology company since then. Uber It was released in 2019.

While the excitement around Cerebras seems to bode well for a tech IPO market that has been largely dormant for the past four-plus years, the problem for nearly every company on the project is that they’re not called SpaceX, OpenAI, or Anthropic.

These three companies, each worth close to or above $1 trillion, are at some stage of preparations for an IPO; SpaceX is expected to make its public debut next week, and the other two are expected to debut later this year. Their offerings will dwarf everything that came before them and will serve to demonstrate how tiny other multibillion-dollar pre-IPO companies are by comparison.

“It’s very hard to care about anything other than the $3 trillion in potential IPOs that will theoretically happen next year,” Sam Lessin, a partner at Slow Ventures, told CNBC’s “The Exchange” on Thursday. he said.

The market has been a challenge for emerging technology companies since early 2022, when rising inflation and rising interest rates drove investors away from risk. There have been occasional pockets of activity since then, but U.S. venture-backed exit value last year was less than a third of its 2021 peak, according to a report from the National Venture Capital Association. annual yearbookand tech IPOs have all but disappeared this year.

Cerebras offered investors one of their first opportunities to enter the AI ​​boom with pure tech stocks, as all the action to date has occurred in the private market. The biggest offering in this space was the AI ​​infrastructure provider CoreWeaveThe company, which went public in March last year, is now valued at over $58 billion.

Lise Buyer, founder of IPO advisory firm Class V group, said late-stage startups are in a period of “pragmatic preparation” and looking for signs of potential take-up. But he said the market needs more data points before it can be declared open.

The conundrum of most high-value start-ups is not just that AI models suck up all the oxygen. Companies are also taking into account the fact that the only thing driving excitement is AI, and the vast majority of companies in the pre-IPO category were created well before the launch of ChatGPT and the start of the prolific AI craze.

“This is a story of the haves and the have-nots,” said Jai Das, a partner at Sapphire Ventures. “If you have a really strong AI story you can get out there, but if you’re a SaaS company without a lot of AI voices, you’re going to have a hard time gaining public attention right now.”

Companies in the SaaS, or software-as-a-service space, are among those hardest hit by the public market due to concerns that many of their products will be replaced to some degree by artificial intelligence models and agents.

For so-called AI homegrown companies, Das said many will delay going public as they scale or wait to see what demand looks like, following OpenAI and Anthropic.

Rick Heitzmann, partner at venture firm FirstMark, said companies preparing for IPOs want others to step in first and show that the market is receptive.

“It will encourage people to say, ‘Hey, jump in, the water is warm,'” he said.

Cerebras is a good start but a unique case. The company entered the market during the silicon renaissance with shares such as: Intel, Advanced Micro Devices And Micron The demand for chips connected to any part of the AI ​​stack is increasing and the demand is increasing. Cerebras claims that its Wafer Scale Engine 3 chips run faster than the graphics processing units of Nvidia, the world’s most valuable company.