Cerebras Just Pulled Off The Biggest Tech IPO Since Uber, Then Dropped 10% On Day Two

For one day, Cerebras was the hottest stock in tech. Then reality showed up. The AI chip startup raised $5.55 billion in its Nasdaq debut on Thursday, the biggest U.S. tech IPO since Uber went public in 2019. By Friday afternoon, the stock had given back about 10%.

A $95 Billion Day One

Cerebras sold 30 million shares at $185 on Thursday. By the closing bell, the stock was at $331.07. That 68% pop pushed the company's market value up to roughly $95 billion.

Two top execs walked away as new billionaires. CEO Andrew Feldman owns a stake worth about $3.2 billion. CTO Sean Lie's stake is worth $1.7 billion.

The IPO is the biggest one by a U.S. tech firm since Uber's 2019 debut. It is also one of the bigger AI bets in the public market this year.

For Cerebras, the cash matters. The IPO gives the company $5.55 billion in fresh fuel to fund growth. Feldman told CNBC the public market was the right way to do it.

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The Pitch And The Pushback

Cerebras builds chips and full AI systems. They are built to train and run AI models faster than the GPUs - graphics processing units, the workhorse chips of AI - that come from firms like Nvidia.

Its flagship is the Wafer Scale Engine 3. It is a single chip built from an entire silicon wafer rather than many small chips. The pitch is simple. Bigger chip, faster results.

The company's main focus is inference. That is the part of AI where the model actually answers a user. Cerebras claims its chips beat Nvidia's GPUs on speed.

Wall Street is not fully sold yet. Analysts at D.A. Davidson called the Wafer Scale Engine "niche-y" in a note ahead of the IPO. They said it is still in the "early stages of maturity." Their worry is that the chip may run faster in some cases, but it is also less flexible than what Nvidia and other chipmakers sell.

What To Watch

This is the second-act problem every big IPO faces. The first day is hype. The second is whether the price holds up under real-money checks.

Cerebras now has to prove the Wafer Scale Engine can handle work beyond the niche cases. It also has to keep buyers ordering at a pace that fits a $95 billion price tag.

The bar is high. Cerebras is in a market that Nvidia still rules. A 68% pop on day one gets the headlines. It does not lock in a single new customer order.

Feldman told CNBC the IPO was the right way to fund the next stage of growth. Friday's price drop says investors want to see that growth show up before they pay full freight.

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