Cerebras Systems IPO Faces National Security Hurdles Amid G42 Investment Concerns

Cerebras Systems is one of Silicon Valley’s most exciting AI chipmakers, best known for building the largest computer chip on the planet—tailor-made for AI computations. With its S-1 registration filed on September 30, 2024, Cerebras made its intention clear: it’s going public on the Nasdaq under the ticker "CBRS". The company aims to raise between $750 million and $1 billion, eyeing a red-hot valuation between $7 to $8 billion.

But there’s a big “but.” That IPO has hit a speed bump thanks to a national security review by the Committee on Foreign Investment in the United States (CFIUS). Why? Because of a $335 million investment from a UAE-based firm, G42, which had prior ties to Huawei—a name that immediately raises red flags in D.C.

So, what does this all mean for Cerebras’ Wall Street debut and the broader AI hardware landscape?

Let’s dig in.

IPO Overview: What’s on the Table?

Cerebras’ S-1 is full of ambition and confidence. Here’s what we know from their filing and announcements:

Ticker Symbol: CBRS
Planned Exchange: Nasdaq Global Market
IPO Goal: $750 million to $1 billion raised
Target Valuation: $7–$8 billion
Underwriters: Citigroup, Barclays (lead), along with UBS, Wells Fargo, Mizuho, TD Cowen, and others

The company’s IPO will include two classes of stock:

Class A common stock (voting)
Class N common stock (non-voting, convertible)

And in classic startup fashion, Cerebras is registering as an emerging growth company, which gives it leeway to adopt less stringent reporting requirements.

The CFIUS Review: What’s Holding Things Up?

Why G42 Is Under the Microscope

CFIUS got involved because of a major investor—G42, a UAE-based tech firm that previously had links to Huawei, China’s telecom behemoth. That $335 million investment into Cerebras now accounts for a massive 83% of the company’s 2023 revenue and 97% of its hardware sales for early 2024.

CFIUS is investigating potential national security concerns, especially since Cerebras’ chips can be used in sensitive AI and defense-related technologies.

The Latest Filing Twist

Cerebras and G42 tried to ease tensions by amending their CFIUS submission to state that G42’s shares would be non-voting. That should’ve calmed the storm, right? Well, not quite. In September 2024, they withdrew their filing altogether—perhaps in hopes the issue would resolve itself or that scrutiny would cool off. As of now, CFIUS is still reviewing the withdrawal, leaving Cerebras in IPO limbo.

Administrative Bottlenecks

Adding fuel to the fire, the White House hasn’t yet filled key roles, including the Assistant Treasury Secretary for Investment Security. Without leadership at the helm, decisions are being delayed.

The Numbers Behind Cerebras: A Startup on Steroids

Let’s talk money. Cerebras isn’t just a sci-fi chip company—it’s growing fast.

2022 Revenue: ~$26 million
2023 Revenue: $78.7 million
First Half 2024 Revenue: $136.4 million
2024 Full-Year Projection: ~$272 million (up 245% year-over-year, per Sacra)

Even more impressive? The company nearly doubled its valuation in just two months in mid-2024—from $2.98 billion in June to $6.08 billion in July. Now it’s sitting around the $8 billion mark, which makes sense given the explosive growth in the AI sector.

Margins Getting Leaner (but Bigger)

2022 Gross Margin: 11.7%
2023 Gross Margin: 33.5%
Early 2024 Gross Margin: 41.1% (slightly compressed due to bulk discounts for G42)

What Does Cerebras Actually Do?

Cerebras is best known for building wafer-scale chips—chips the size of dinner plates that are 200 times larger than typical GPUs. These chips are built specifically for AI training, enabling faster model development and reduced costs.

It also offers cloud-based supercomputing via the Cerebras Cloud, targeting companies who want access to AI infrastructure without buying the actual hardware.

Their solutions are seen as serious alternatives to Nvidia’s dominant AI offerings. And given Nvidia’s supply shortages and pricing, a strong second option is exactly what the market needs.

Global Impact and Use Cases

Cerebras isn’t just a U.S. darling. Its tech is already making waves internationally:

It powered Microsoft’s Arabic large language model within the Azure AI platform.
It provides turnkey AI supercomputers, ideal for governments, enterprises, and research labs.

And let’s not forget: the AI computing market is expected to grow from $131 billion in 2024 to $453 billion by 2027. This puts Cerebras in a prime position to capitalize—if they can clear the national security hurdle.

The Nvidia Factor: Is There Room for a Challenger?

Cerebras is boldly positioning itself as a rival to Nvidia. While Nvidia leans heavily on its GPU business and CUDA ecosystem, Cerebras bets big on AI-specific chips and pay-per-use models.

In the IPO prospectus, Cerebras points out the shortcomings in current AI infrastructure—like GPU memory bottlenecks and slow training cycles—and proposes its wafer-scale engine as the fix.

Is it ambitious? Absolutely. But Nvidia’s market dominance has left many enterprises desperate for alternatives. Cerebras could be that breath of fresh air.

What’s Next for Cerebras?

Until the CFIUS review wraps up, the IPO is in a bit of a holding pattern. If the deal with G42 gets flagged or denied, Cerebras might have to:

Find new investors
Reduce its dependency on foreign capital
Or in a worst-case scenario, withdraw the IPO entirely

Still, insiders say the company remains optimistic and is working behind the scenes to resolve the issue.

Key Takeaways

Cerebras Systems filed for a Nasdaq IPO under ticker "CBRS", aiming for an $8 billion valuation
The company’s biggest revenue driver is G42, a UAE investor under U.S. security scrutiny
CFIUS is reviewing the investment due to national security concerns over G42’s past Huawei ties
Cerebras' tech competes directly with Nvidia and positions itself as a new AI hardware leader
Despite risks, the company’s growth and market opportunity remain massive

Wrapping It Up

Cerebras’ IPO could reshape the AI hardware landscape—if it gets past the red tape. The combination of cutting-edge technology, explosive revenue growth, and a $453 billion AI market opportunity makes it one to watch. But as with any high-stakes IPO, especially one tangled in geopolitics, nothing is guaranteed.

So if you’re an investor, a founder, or just a tech enthusiast, keep your eyes on Cerebras. It could either be the next Nvidia, or the next great tech “what could have been.”

FAQs

Why is the U.S. government delaying Cerebras’ IPO?

Due to a CFIUS investigation into a $335 million investment from UAE-based G42, which could pose national security risks.

What does Cerebras make?

It makes AI-specific hardware like wafer-scale chips and also offers cloud-based AI supercomputers.

When will the IPO happen?

There’s no official date yet. It depends on the outcome of the CFIUS review.

Could Cerebras replace Nvidia?

It’s early days, but Cerebras is one of the few companies with the tech and vision to potentially challenge Nvidia in AI infrastructure.

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