Might this OpenAI CEO backed chipmaker inventory rival Nvidia? 

Nvidia’s (NASDAQ: NVDA) dominance within the worthwhile AI chipmaking sector has attracted the eye of would-be rivals. 

A kind of is Cerebras — a chipmaker based in 2015 by SeaMicro veterans and two of its founders, Andrew Feldman and Gary Lauterbach, after SeaMicro was acquired by Superior Micro Units (NASDAQ: AMD) for $334 million in 2012.

Along with this, OpenAI CEO Sam Altman and Solar Microsystems co-founder Andy Bechtolsheim are backing the corporate. 

Semiconductor shares have seen file efficiency because the creation of the AI revolution, and no firm has seen a much bigger enhance in valuation than Nvidia, which is up 158.36% year-to-date (YTD) at press time.

Cerebras stands out for extra than simply its skilled employees — the chipmaker’s know-how gives an alternate methodology for coaching AI fashions, and the corporate has even filed a preliminary IPO prospectus.

Cerebras IPO and institutional backing

In a yr that has seen restricted restoration when it comes to tech IPOs, Cerebras is a reasonably distinctive case — the unicorn startup has raised greater than $720 million in enterprise capital funding and was valued at $4.25 billion as of 2021. 

Notable buyers embody Basis Capital, Benchmark, Eclipse Ventures, Alpha Wave, Coatue, and Altimeter — all of which personal a 5% or bigger stake within the firm.

Cerebras is about to commerce on the Nasdaq below the ticker ‘CBRS’, with Citigroup and Barclays as lead underwriters — considerably, neither Goldman Sachs nor Morgan Stanley, each leaders in tech IPOs, are concerned. The corporate is aiming to boost between $750 million and $1 billion — which might place it at a valuation of $7 billion to $8 billion.

CBRS wafer-scale engine chips

On the core of Cerebras’ attraction is its distinctive Wafer-Scale Engine (WSE) know-how, now in its third iteration with the WSE-3.

Nvidia’s chips, just like the H100, are primarily based on conventional GPU structure designed to deal with quite a lot of computing duties, making them adaptable throughout completely different purposes. 

Cerebras’ WSE-3, against this, is an application-specific processor optimized purely for AI workloads, particularly in inference and coaching duties.

At roughly 46,000 sq. millimeters, the WSE-3 is 56 occasions bigger than Nvidia’s largest chip, and its built-in design eliminates the necessity for a number of processors linked by interconnects. 

This large chip holds 4 trillion transistors and 900,000 cores, in addition to 44GB of on-chip reminiscence, enabling knowledge to be processed throughout the chip relatively than requiring frequent off-chip reminiscence entry.

CBRS uphill battle in opposition to Nvidia

Though CBRS chips can present higher efficiency for sure duties, Nvidia has the advantage of a well-developed, versatile, and entrenched software program ecosystem in CUDA — one thing that Cerebras presently lacks. The corporate’s chips are additionally designed to deal with a broader vary of duties, which embody graphics rendering, whereas CBRS specializes solely in AI inference.

NVDA additionally has a first-mover benefit — having already secured numerous partnerships with hyperscalers. Nvidia additionally has a large R&D funds at its disposal, in addition to the means to draw prime expertise within the area. Even with broad-based funding, it’s not possible that CBRS will be capable of compete at scale.

Profitability and income focus points

When it comes to financials, the corporate recorded a web lack of $77.8 million and $8.7 million in gross sales within the first six months of 2023. Within the first six months of 2024, the corporate had $66.6 million in losses, however gross sales expanded quickly to $136.4 million.

That’s good progress — nevertheless, the corporate remains to be removed from profitability. These points are additional exacerbated by the truth that 87% of the corporate’s income comes from a single supply — Abu Dhabi-based AI firm G42.

Cerebras has recognized the overreliance on G42 as a weak spot within the prospectus. Regulatory issues and shifts in G42’s AI infrastructure may severely hamper the IPO. The standard challenge of lengthy, advanced, worldwide provide chains can be current.

Nevertheless, it ought to be famous that CBRS may very properly safe a distinct segment for itself — albeit a a lot smaller, extra specialised one.

Buyers and merchants ought to hold an eye fixed out for any press releases as we transfer nearer to the general public itemizing, which is predicted to happen in late 2024 or early 2025. Within the meantime, CBRS’s destiny is totally tied to G42.