Key insights
- Cerebras is expected to IPO at a price range of $150-$160, a significant increase from initial estimates. The author argues that at this valuation, the stock is overvalued compared to competitors like Nvidia, Broadcom, and AMD, considering its lower gross margins and concentrated customer base. Concerns about OpenAI's financial health, a major Cerebras customer, further dampen enthusiasm despite the company's technological advantages. The IPO may pop initially due to high demand, but the valuation is unsustainable.
Was genuinely excited about this one. Now ran the numbers and decided the upside doesn't justify the price anymore. The tech is legitimately impressive, their chip does AI inference 20x faster than Nvidia's H100, and that speed advantage is real, not just marketing. They have OpenAI, AWS, and Meta as customers with $24.6B in signed contracts.
But the bankers have cooked it.
IPO expected price range history this week alone:
- Monday: $115–125 - Thursday: $125–135 (Bloomberg) - Sunday night: $150–160 (Reuters)*
Three raises in under a week. 20x oversubscribed apparently. Great for the company, bad for us.
At $160 the numbers don't work for me:
- Nvidia, PS 24x, gross margin 75%, hundreds of customers - Broadcom, PS 31x, gross margin 68%, 6 major customers - AMD, PS 9x, gross margin 55%, dozens - Cerebras (at $160), PS 67x, gross margin 43%, 3 major customers
Cerebras will be more expensive than all of them on trailing revenue, has the worst margins, and the most concentrated customer base.
The only justification is forward revenue, if OpenAI executes and 2026 revenue hits $1.1B+, then the forward P/S drops to ~30x (Broadcom territory). But OpenAI is reportedly burning $14B this year and their CFO has apparently warned internally about paying future compute contracts.
Will it pop on day one? Probabably, as stock float is tiny and demand insane. But it's not based on any real numbers anymore.
Reuters news: Cerebras to raise IPO price range to $150-$160 as demand surges, sources say: https://www.reuters.com/legal/transactional/cerebras-raise-ipo-price-range-150-160-demand-surges-sources-say-2026-05-10/