Nvidia challenger Cerebras raises $1.1bn ahead of IPO
Start-up bets on bigger chips to take on world’s largest company’s dominance of AI computing
Chipmaker Cerebras Systems has raised more than $1bn from investors including Fidelity and Donald Trump Jr’s firm 1789 Capital as it looks to woo customers away from rival Nvidia.
The Silicon Valley start-up, which will be valued at $8.1bn after the investment, is targeting an initial public offering to cash in on increased demand for advanced semiconductors triggered by the artificial intelligence boom.
Chips have become the most sought-after commodity for start-ups such as OpenAI, Anthropic and Big Tech groups seeking to train and run their own AI models. That has propelled Nvidia to become the world’s most valuable company, with a market capitalisation of $4.4tn.
Nvidia’s dominance stems from the strength of its graphics processing units, or GPUs, in training AI models, and the popularity of its widely used Cuda software.
But Cerebras chief executive Andrew Feldman claims his 10-year-old company’s technology is faster than Nvidia at managing the coding and natural language queries that make up the bulk of AI tools’ usage.
“We built the largest chip in the history of the computer industry. Our chip is the size of a dinner plate, most chips are the size of postage stamps,” said Feldman. “That allows us to achieve a performance you can’t achieve by lashing together smaller chips.”
Nvidia has compounded its advantage by funnelling its vast revenues into a series of investment deals with AI model developers and infrastructure groups around the world.
Those deals have included a $5bn investment into Intel, a $100bn commitment to OpenAI and a £500mn commitment to cloud computing start-up Nscale in the past month alone.
“When companies see their technical advantage diminish they start using their balance sheet,” said Feldman. “[Nvidia] are going to start trying to tie people up with their balance sheet rather than their technical advantage.”
Nvidia said that it “wins on merit, as reflected in our benchmark results and value to customers. Nvidia AI infrastructure provides an unparalleled combination of performance, versatility and value.”
Cerebras customers include Meta, Amazon Web Services and French AI lab Mistral, as well as a number of US government departments and healthcare institutions.
Fidelity Management & Research Company and Atreides Management, founded by former Fidelity portfolio manager Gavin Baker, led the funding round. Tiger Global and Valor Equity Partners, a backer of a number of Elon Musk’s companies, also participated — alongside 1789 Capital, where President Donald Trump’s son is a partner.
Cerebras was still targeting a public listing in the near term, said Feldman. Cerebras kicked off its IPO process a year ago but was delayed by a Committee on Foreign Investment in the US review of an investment in the company by Abu Dhabi AI group G42, which remains Cerebras’ largest customer and a key partner.
The review was resolved in March this year, Feldman said, clearing the way to go public.
Cerebras has been lossmaking since its launch, as it invests heavily in research and development. The company does not publish up-to-date financial metrics, but disclosed last year that its net loss in the first half of 2024 was $67mn, with revenues of $136mn.