Cerebras Systems Secures $1 Billion in Pre-IPO Funding

Cerebras, the AI chipmaker that confidentially filed for an IPO a year ago, has secured $1.1 billion in new funding, valuing the company at $8.1 billion. This move provides the deep-pocketed startup with additional runway as it seeks to challenge Nvidia in the high-stakes arena of artificial intelligence accelerators.

The funding round, while extending Cerebras’ private status, underscores the intense investor appetite for companies poised to capitalize on the insatiable demand for AI compute. In its confidential IPO filing, Cerebras positioned itself as a designer of specialized chips and a provider of cloud-based AI compute services, emphasizing its focus on both AI model training and inference.

One potential hurdle highlighted during Cerebras’ early IPO preparations was its reliance on a single, prominent Middle Eastern customer, G42. Concerns arose regarding the potential need for clearance from the Treasury Department’s Committee on Foreign Investment in the U.S. (CFIUS) regarding G42’s stake in the company. This factor added complexity to the IPO timeline.

Despite the delay and potential regulatory considerations, the new funding round almost doubles the company’s 2021 valuation of $4 billion, signaling strong conviction from private market investors. CEO Andrew Feldman affirmed the company’s continued intention to pursue a public listing.

“I don’t think this is an indication of a preference for one or the other,” Feldman explained. “We have tremendous opportunities in front of us, and it’s good practice, when you have enormous opportunities, not to let them fall by the wayside for lack of capital.” Feldman had previously stated the company’s aspiration to launch an IPO in 2025.

Cerebras joins a growing list of high-valuation AI companies raising substantial private capital. Databricks recently closed a $1 billion funding round at a valuation exceeding $100 billion. Speculation also swirls around potential significant investments in OpenAI by Nvidia, possibly reaching up to $100 billion for data center infrastructure. Anthropic, another AI player, recently announced raising $13 billion at a $183 billion valuation.

The investor roster for Cerebras’ latest funding round includes 1789 Capital, Alpha Wave, Altimeter Capital, Atreides Management, Benchmark, Fidelity, Tiger Global, and Valor Equity Partners. These investors bring not only capital but also expertise and validation to Cerebras’ strategic direction.

“It was with investors who everybody would be proud of to have cornerstone your IPO,” Feldman said, highlighting the caliber of the participants. The injection of capital is earmarked for expanding U.S.-based manufacturing operations, a crucial step towards securing supply chain resilience and responding to escalating demand.

While Taiwan Semiconductor Manufacturing (TSMC) handles the initial fabrication of Cerebras’ wafer-scale chips (WSEs), the packaging process is carried out in the U.S. To keep pace with burgeoning demand, Cerebras intends to ramp up its domestic production workforce.

“We increased manufacturing capacity in the last 18 months 8x, and we are going to go another 4x in the next six or eight months,” Feldman revealed.

Though Feldman declined to disclose recent specific financial figures, he noted that revenue in the second quarter of 2024 was approximately $70 million, a significant jump from the prior year’s $6 million.

Cerebras has recently highlighted partnerships with companies like Hugging Face, Meta, Notion, and Perplexity, showcasing the increasing adoption of its wafer-scale technology for AI workloads. The sheer size of the WSE, essentially an entire silicon wafer dedicated to processing, is what allows Cerebras to offer unmatched compute density and memory bandwidth for specific AI tasks, particularly those involving large language models and deep learning.