Chipmaker Nvidia has significantly increased investor wealth, especially in the artificial intelligence (AI) sector. Many AI stocks have soared recently due to excitement about next-gen tech.
If you like Nvidia but want more options or to support an emerging company, consider Cerebras, which may be going public soon.
Is Cerebras the Next Big AI Stock?
Cerebras is a tech firm that may compete with Nvidia in the future. They claim to have “the world’s largest, most powerful commercially available chip,” the Wafer-Scale Engine. Their latest version, WSE-3, is 57 times bigger than the top commercial GPU and has 52 times more cores, making it ideal for AI training.
Cerebras has seen rapid growth, earning $136.4 million in the first half of 2024—already outpacing 2023’s total revenue of $78.7 million, which was triple the previous year’s $24.6 million. The company was founded in 2016 and began revenue generation in 2019.
Potential Risks
Despite impressive growth, Cerebras isn’t profitable yet, reporting a $41.8 million net operating loss this year, although it’s improved from over $81 million last year. As the company grows, expenses are expected to rise.
A significant risk is the reliance on a single customer, Group 42 Holding, which accounted for 87% of Cerebras’ revenue this year, up from 83% in 2023. Such heavy dependence makes the company’s financial health susceptible to changes in demand from this customer.
Should You Invest in Cerebras?
Cerebras may go public later this year, offering an exciting early investment opportunity. In 2021, it was valued at around $4 billion, and it could be worth more now due to its growth and AI excitement—though still below Nvidia’s valuation.
Investing in IPOs is risky, especially for businesses in early growth like Cerebras. However, if the company and its chips prove effective, the potential rewards could be high.
This stock may not suit everyone, but for those with a high-risk tolerance looking for the next big AI investment, Cerebras might be worth considering.
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