Could Cerebras Be the Next Nvidia?

Cerebras Systems (NASDAQ: CBRS) took the market by storm last week when it surged 68% on its first day of trading. The reason behind the excitement is clear. Cerebras offers something in great need right now: a high-performance AI chip to power workloads. In fact, the company even says its chip has surpassed the performance of graphics processing unit (GPU)-based systems -- here, we might think of AI chip market leader, Nvidia (NASDAQ: NVDA), which is known for its GPUs.

Thanks to this market dominance, Nvidia has delivered multiple wins for investors in recent years -- in fact, over the past five, the stock has climbed 1,400%. Propelling this performance has been solid earnings growth. AI companies have rushed to Nvidia for compute, and this has helped revenue reach records well into the billions of dollars. The AI giant finished the latest full year with revenue of more than $215 billion, representing a 65% increase.

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Now, as Cerebras takes its first steps as a publicly traded company, it's reasonable to ask the following: Could this young AI company be the next Nvidia? Let's find out.

Cerebras' big chip

So, first, let's consider the point that makes Cerebras look very promising right now. The company has built a chip that's 58 times the size of Nvidia's B200 chip, and this size allows it to deliver great speed. Cerebras says that its Wafer-Scale Engine (WSE) has delivered up to 15 times faster inference -- this is the large language model's "thinking" process -- than systems powered by GPUs. And in certain situations, Cerebras says its chips have been 1,000 times faster. Cerebras' WSE 3 includes 4 trillion transistors to fuel a given job -- the company compares this to an Nvidia package of two GPUs that hold 208 billion transistors.

Customers may access the WSE either by ordering platforms for their data centers or by using them through the Cerebras Cloud or a third-party cloud. And Cerebras has seen gains in revenue as customers flock to this exciting solution. Revenue has soared about 2,000% from 2022 to last year, when it came in at $510 million.

Investors clearly liked Cerebras' progress in the AI market as the stock surged on its first day of trading -- May 14 -- and the company raised $5.5 billion for the biggest IPO this year. In the following trading session, however, the stock gave back some of the gains.