Nvidia (NVDA +2.44%) has reigned for several years as the king of artificial intelligence (AI) chips. The company's graphics processing units (GPUs) became the de facto gold standard for training and running these sophisticated algorithms when the AI boom kicked off in late 2022. While growing competition has long been on the minds of investors, Nvidia continues to reap the rewards of its unrelenting focus on AI.
However, Cerebras Systems has pioneered a novel chipmaking process that could be a game changer, and several recent contract wins have prompted the company to announce its initial public offering (IPO). If early demand is any indication, investors are keen to own a piece of Cerebras as it takes on Nvidia for the crown.
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Strong demand
Last month, Cerebras filed an S-1 with the Securities and Exchange Commission (SEC) to go public. The company announced its intention to trade on the Nasdaq using the ticker "CBRS." The company originally announced plans to sell 28 million shares at a proposed price range of $115 to $125 per share. At the high end of that range, Cerebras would have raised as much as $3.5 billion.
However, strong demand for the stock offering from institutional investors over the past week has prompted the company to modify its plans. In a revised S-1 released on Monday, Cerebras now says it plans to offer 30 million shares at a price range of $150 to $160 per share, raising up to $4.8 billion.
Furthermore, management has granted the underwriters -- the investment banks handling the IPO -- the right to purchase an additional 4.5 million shares to cover "over-allotments," when there's insufficient stock to cover the demand from institutional investors. If the additional shares are sold, the company could raise an additional $720 million, bringing total proceeds to $5.52 billion.
The stock is expected to begin public trading on May 14, according to published reports. At the high end of its new price range, Cerebras could be worth as much as $48.8 billion when the company goes public. For context, the company was valued at an estimated $23 billion in its last private funding round in February.
What's fueling the strong demand?
While Nvidia's GPUs have become the industry standard for AI, chipmakers have been working around the clock to develop new solutions to power the next generation of AI. Rather than adapting an existing chip architecture -- a strategy that has served Nvidia so well -- Cerebras has taken a different approach, going back to the drawing board.
The company came up with a novel solution, using the entire silicon wafer for its Wafer-Scale Engine (WSE), rather than cutting it into hundreds of smaller semiconductors. As a result, the WSE boasts 4 trillion transistors, 900,000 cores, and 44 Gigabytes of on-chip memory. Cerebras says this unique construction reduces the latency (lag) that is inherent in other AI systems, as "communication is thousands of times faster on chips than across chips." As such, the company believes the WSE is a better solution than Nvidia's GPUs.
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Key Data Points
For the year ended Dec. 31, 2025, Cerebras generated revenue of $510 million, resulting in an operating loss of $345 million. The company's remaining performance obligation (RPO), or contractually obligated revenue that hasn't yet been recognized, was $24.6 billion. Management expects to recognize 15% of this balance in 2026 and 2027, 43% in 2028 and 2029, and the remainder at a later time.
However, recent contracts could boost Cerebras's future performance. In early 2026, Cerebras inked a $20 billion, 750-megawatt deal with OpenAI. In March, the company partnered with Amazon Web Services (AWS) to offer the WSE to cloud customers, with the company reportedly purchasing $270 million in Cerebras stock.
Is Cerebras stock a buy at IPO?
There's an inherent risk in buying stocks at IPO. The companies haven't yet been subjected to the public spotlight, and they always try to put their best foot forward in pre-IPO filings. Cerebras isn't yet profitable, which represents another risk. Finally, if it prices at the high end of the range, the stock will be selling for 96 times sales, a lofty valuation for an unproven company.
I wouldn't be in any rush to buy Cerebras when it goes public. If history is any indicator -- and it usually is -- the stock will likely fall once the IPO-related hype wears off, giving savvy investors a chance to buy the stock at a more reasonable price.
