Cerebras IPO boosts expectations for more big tech stock listings

In short: A strong stock market debut from AI chipmaker Cerebras is adding momentum to a wider push for more tech companies to go public.

What's going on

Cerebras Systems, a company that designs chips used to run AI systems, raised $6.4bn in its initial public offering, or IPO. An IPO is when a private company starts selling shares to the public on a stock exchange, like opening its ownership to everyday investors.

Bankers involved in the deal said demand was strong. They repeatedly increased the share price and the number of shares sold. Cerebras shares ended their first trading day up 68%, giving the company a valuation of about $70bn, similar to General Motors, according to the Financial Times.

The Cerebras result is being read on Wall Street as a sign that investors are ready to buy more new tech stocks. Bank of America’s Magdalena Heinrich said the US market could be on pace for nearly $90bn in IPOs this year. Data from Dealogic suggests that expected listings, including a SpaceX IPO reportedly targeted for June and possible share sales from AI labs such as OpenAI and Anthropic, could push totals beyond the 2021 US IPO record of $156bn.

What to watch

A key question is whether more AI focused companies can keep investor interest as they ask for large amounts of funding. Many want to build huge data centers (warehouses full of computers) and they also need electricity, which is why investors have been watching chip and energy companies closely. If market conditions stay steady, bankers expect a larger pipeline of tech and other listings, including healthcare, real estate, and clean energy.

Source: Financial Times