Uncovering the Process of Purchasing Cerebras Shares Prior to IPO

Gaining Insight into Pre-IPO Purchase of Cerebras Shares

Boasting itself as the "first mover" in the field of generative artificial intelligence (AI), Cerebras and its shares have gained significant attention from AI investors, professionals, and enthusiasts. In March 2024, Cerebras presented the Third Generation 5nm Wafer Scale Engine, or WSE-3, reportedly the fastest AI chip available on the market. The company's rapid progress has indeed caught the eye of the AI community.

The surge in AI technology, particularly with the introduction of ChatGPT by Open AI in late 2022, has significantly impacted various industries. And generative AI, alongside other models, is increasingly becoming an integral part of our daily lives, with no signs of slowing down. According to Bloomberg Intelligence, the generative AI market is expected to expand from approximately $40 billion in 2022 to over $1.3 trillion in 2032 - a staggering compound annual growth rate (CAGR) of almost 42%.

In addition to numerous government laboratories, Cerebras boasts a broad range of private-sector clients. For instance, the prestigious Mayo Clinic has sought Cerebras' expertise in creating AI models for healthcare. Although the specifics of the arrangements are not publicly disclosed, Cerebras CEO Andrew Feldman revealed the deal as a substantial "multimillion-dollar" contract. French multinational oil and gas corporation TotalEnergies (TotalEnergies SE, ISIN FR0010478231, 0.26%) has also collaborated with Cerebras, leveraging its expertise in seismic modeling.

Investors keen on including Cerebras in their portfolios must weigh numerous factors, including the timing of its planned initial public offering (IPO) and alternative investment options. Prospective shareholders need to stay informed about the company's upcoming IPO.

Artificial Intelligence

Artificial Intelligence, or AI, refers to machines emulating human thought processes.

Is it publicly traded?

Is Cerebras publicly traded?

As of November 2024, Cerebras had yet to become a publicly traded company. However, the company had previously submitted SEC Form S-1, indicating plans to launch an IPO soon.

Cerebras has managed to secure funding from notable investors such as the Abu Dhabi Growth Fund and venture capital firm Benchmark Capital. Following a Series F round in 2021, Cerebras had garnered about $715 million in investment, according to Crunchbase.

IPO

Initial Public Offering, or IPO, is the initial sale of stock by a private company, effectively making it a publicly-traded entity.

When will it IPO?

When will Cerebras IPO?

While the number of companies opting for IPOs witnessed a decline in 2023 compared to previous years, there has been a resurgence in IPO activity throughout 2024. Although Cerebras has not officially scheduled an IPO, there are rumors that the company is considering debuting on public markets as soon as late 2024.

In its SEC Form S-1, Cerebras noted that Citigroup Inc. and Barclays PLC would serve as joint book-running managers for the IPO. While there's no clarity on the specific IPO date, Cerebras intends to list its stock on the Nasdaq exchange under the ticker symbol CBRS. Consequently, investors may soon have the opportunity to purchase these IPO shares, likely aiming for a valuation exceeding $4 billion, as per its latest funding round in 2021.

How to buy

How to buy Cerebras stock

For most investors, it is not feasible to acquire Cerebras shares prior to the IPO. However, accredited investors may be eligible for purchasing pre-IPO shares, such as Cerebras. Platforms like Forge Global, for example, grant accredited investors access to pre-IPO companies like Cerebras.

Investors who are not accredited may find themselves unable to obtain Cerebras shares; however, they can still explore other AI stocks that hold potential appeal. Here's a step-by-step guide on how to buy stocks.

Step 1: Open a brokerage account

Investing in stocks can be a strategic means to accumulate wealth. To kickstart the process, investors must establish a brokerage account. Several options are available, but newcomers might find Fidelity attracting due to its zero-commission online trades.

Step 2: Determine your budget

Experienced investors know that creating a budget is indispensable for profitable investing. Perhaps you have sufficient funds to begin investing, or you plan to invest modestly. Regardless, it's crucial to evaluate your financial situation and allocate an appropriate budget.

While prospective Cerebras investors wait for the company to hold its IPO, there are various other stocks that are worth considering in the interim.

1. Nvidia

A viable alternative for potential Cerebras investors is Nvidia, a renowned AI industry powerhouse. With its Hopper Tensor Core GPU, Nvidia has demonstrated market leadership in supporting AI computing.

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Nvidia beefed up its AI game in March 2024 with its X800 series network switches. The corporation posits the X800 switches as "complete networking platforms that allow us to achieve trillion-parameter-scale generative AI necessary for new AI infrastructure builds."

Despite boasting a dominant market position -- its market capitalization surpassed $2.9 trillion in October 2024 -- there's still widespread agreement among investors that Nvidia offers ample growth prospects ahead. This undoubtedly appeals to investors who are also keen on Cerebras.

Market Capitalization

Market capitalization refers to a publicly traded company's total share value. Given its substantial cash generation, it represents an attractive AI investment opportunity, falling within the lower end of the risk spectrum. In fiscal year 2024, for instance, Nvidia reported a free cash flow of $26.9 billion.

Qualcomm

Instead of viewing a rival, investors might feel compelled to acquire shares of a collaborator. Qualcomm, for example, has partnered with Cerebras, thereby providing investors with an indirect avenue to invest in the privately held firm.

In March 2024, Cerebras revealed that it had chosen Qualcomm's Cloud AI 100 Ultra, an AI inference card tailored for generative AI and large language models, to be used alongside its CS-3 AI accelerators for training. This collaboration reportedly enables a superior AI solution.

Felicitously labeling Qualcomm as an AI company would undervalue its true worth. As a top semiconductor company, Qualcomm offers wireless solutions found in numerous applications, such as smartphones, vehicles, and devices connected through the Internet of Things (IoT).

The company boasts a multitude of growth opportunities. While investors wait for these to materialize, they can benefit from Qualcomm's dividend, which boasted a forward yield of 1.9% as of April 2024.

Astera Labs

Instead of anticipating Cerebras' IPO, investors can opt for a publicly-traded AI-oriented semiconductor stock, such as Astera Labs. Astera Labs debuted on the stock market in March 2024, offering its Intelligent Connectivity Platform to cater to the connectivity requirements of AI and cloud infrastructures. Already, it has secured several industry leaders as clients.

Raghu Nambiar, Advanced Micro Devices' (AMD) vice president for data center ecosystems and solutions, stated: "Collaboration with Astera Labs on PCIe technologies [connections for high-bandwidth communication] ensures our customers' platforms continue to meet the higher bandwidth connectivity requirements of next-generation AI and HPC workloads." Intel and Nvidia also leverage solutions from Astera Labs.

In 2023, Astera Labs reported revenue of $115.8 million and a net loss of $26.3 million.

Step 4: Place an order

You're just a few steps away from the finish line. You'll need to decide on the number of shares you'd like to buy. Next, you'll have to select the type of order you wish to submit: a market order or a limit order. Finally, click the 'buy' button and celebrate your venture towards personal wealth accumulation.

Profitability

Is Cerebras profitable?

Based on Cerebras' S-1 filing, the company has yet to achieve profitability. Despite posting gross profits of $2.9 million and $26.4 million in 2022 and 2023, respectively, Cerebras reported net losses in each of the previous two years.

While it's not generating positive earnings, Cerebras deserves recognition for narrowing its losses. Through the first half of 2024, Cerebras reported a net loss of $66.6 million, which represented an improvement compared to the net loss of $77.8 million reported during the same period in 2023.

Should I invest?

Should I invest in Cerebras?

Cerebras is a privately-held firm, so it's not an investment option for most people. Since the company's submission of Form S-1, however, it seems that retail investors may not have to wait much longer before they can include this AI stock in their portfolio. Even when Cerebras stock becomes available, investors must recognize the inherent risks, including the fact that the company is still unprofitable.

Accredited investors may be able to gain exposure to Cerebras currently. However, even for them, a position in Cerebras carries a certain degree of risk, so they must be comfortable with a more speculative investment.

ETF options

ETFs with exposure to Cerebras

Cerebras isn't publicly traded, so investors can't gain exposure to the company through an exchange-traded fund (ETF). However, other options exist. There are several AI ETFs that might pique investors' interest.

Vanguard Information Technology ETF (VGT) (-1.56%): Don't let the name deceive you. While AI isn't explicitly stated in the ETF's name, the fund has a good deal of exposure to AI. Nvidia is the ETF's third-largest holding; Broadcom and Advanced Micro Devices come in second and third, respectively. The ETF features a low expense ratio of 0.1% and makes quarterly distributions.
Roundhill Generative AI & Technology ETF (CHAT) (-1.36%): Positioning itself as the "world's first Generative AI ETF," this ETF may be an attractive choice for investors disappointed they can't buy Cerebras stock. Nvidia is the ETF's largest holding, followed by OpenAI partner Microsoft in the ETF's second-largest position. Together, Nvidia and Microsoft account for over 15% of the ETF's portfolio, which includes 43 holdings and a 0.75% expense ratio.
Global X Artificial Intelligence & Technology ETF (AIQ) (-1.3%): With 84 holdings in its portfolio, this ETF offers a broader approach to AI. The ETF invests in companies that produce hardware catering to AI, as well as companies that stand to benefit from the development and use of AI technology in their products and services. Besides top holdings Nvidia, Broadcom, and Qualcomm, the ETF includes Meta Platforms, Netflix, and Amazon in its top holdings. The ETF has a 0.68% expense ratio.

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The bottom line on Cerebras

Given the significant growth expected in the generative AI market over the next decade, it's no surprise that investors are taking notice of Cerebras. However, it's unclear how the company's success translates to its financial health, a topic that will become clearer if Cerebras moves forward with an IPO. In the meantime, there are plenty of other AI stocks and ETFs for investors to consider.

FAQ

Can you invest in Cerebras?

Because Cerebras has not held an IPO as of April 2024, the stock is not accessible to retail investors. Accredited investors may be able to invest in Cerebras through platforms such as Forge Global.

Is Cerebras on the stock market?

As of April 2024, Cerebras is not a publicly traded company listed on either the New York Stock Exchange or the Nasdaq.

Is Cerebras a listed company?

Despite having completed funding rounds and securing several investors, Cerebras has not yet held an IPO and is not listed on U.S. exchanges.

What is the stock symbol for Cerebras?

Because Cerebras has not held an IPO as of early 2024, it does not have a stock ticker. If the company decides to go public in late 2024 (or later), investors will then learn the stock's symbol.

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Given the anticipated growth in the generative AI market and Cerebras' strategic partnerships with major companies like TotalEnergies, prospective investors may want to explore alternative AI stocks, such as Nvidia or Qualcomm, until Cerebras goes public.
With Cerebras yet to become a publicly traded company, investors can consider investing in publicly-traded AI stocks like Nvidia or Qualcomm to diversify their portfolios while waiting for the opportunity to purchase Cerebras shares.