Cerebras blockbuster IPO boosts hype for SpaceX, OpenAI, Anthropic

Cerebral Systems‘ A flashy IPO this week gave investors a taste of what’s to come in artificial intelligence. But it also served as a reminder of how difficult it is for non-AI companies to capture the attention of Wall Street.

Shares of the AI ​​chipmaker fell nearly 70% in their early market session on Thursday, pushing the company’s market cap to around $95 billion. Only two technology companies have ever closed their first day of trading in the US with a valuation of $100 billion or more: Alibaba again Facebook.

Cerebras also holds the distinction of the largest IPO of the year and the largest offering of a US technology company since then. Uber on the market in 2019.

While the excitement surrounding Cerebras seems to bode well for the tech IPO market that has been dormant for the past four-plus years, the problem with almost all of the companies on the way is that they aren’t named SpaceX, OpenAI or Anthropic.

Those three companies — each valued at or above $1 trillion — are in some stage of IPO prep, with SpaceX expected to file its public prospectus as soon as next week and the other two looking forward to later this year. Their contributions will dwarf anything that comes before them and serve to further demonstrate how small some pre-IPO multi-billion dollar companies are in comparison.

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

The market has been a challenge for emerging technology companies since early 2022, when rising inflation and rising interest rates are driving investors away from risk. There have been occasional pockets of activity since then, but the number of US-funded exits last year was less than one-third the peak in 2021, according to the National Venture Capital Association’s yearbook, and technology IPOs this year were almost non-existent.

Cerebras has given investors one of their first opportunities to tap into the AI ​​boom with a pure-play technology stock, as all deals so far have been in the private market. The previous largest offering in the space was an AI infrastructure provider CoreWeavewhich went public in March of last year and is now valued at over $58 billion.

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

The paradox of many high-value startups isn’t just that AI models suck up all the oxygen. Companies are also looking at the fact that the only thing that creates excitement is AI, and most of the companies in the pre-IPO stage were formed before the launch of ChatGPT and the beginning of the creation of AI.

“It’s a story of the poor and the have-nots,” said Jai Das, a partner at Sapphire Ventures. “If you have a really strong AI story, you can get out, but if you’re a SaaS company that doesn’t have a lot of AI buzz, you’re going to have a hard time getting public market interest right now.”

Companies in SaaS, or software-as-a-service, have been some of the hardest hit by the public market due to concerns that many of their products will be, to some extent, replaced by AI models and agents.

Of the so-called native AI companies, Das said many will stop going public as they scale, or wait to see what it looks like to follow OpenAI and Anthropic.

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

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

Cerebras is a good start, but it’s a unique case. This company entered the market during the silicon revival, with shares of Intel, Advanced Micro Devices again Micron all the ups and downs of chips tied to any part of the AI ​​stack. Cerebras says its Wafer Scale Engine 3 chips run faster than graphics processing units from Nvidia, the world’s most important company.

Earlier this year, Cerebras signed a $20 billion deal with OpenAI and a deal with Amazon Web Services.

Attention now turns to SpaceX and Elon Musk’s effort to bring his reusable rocket maker to the public market. In February, Musk merged SpaceX with xAI, his AI startup, in a deal valued at $1.25 trillion. At that market time, SpaceX will be among the 10 most valuable US technology companies.

“No one wants to be caught in the SpaceX space,” said Renos Savvides, head of equity capital markets at Neuberger Berman. “If you’re a small IPO and you’re on the road at the same time as SpaceX, nobody’s going to pay attention to your deal.”

WATCH: Gil Luria of DA Davidson on Cerebras’s high cap caption