👹 Cerebras’ monster IPO

The recent rally in memory stocks has reshaped where liquidity is deepest on Wall Street, with Micron having taken the place of Nvidia as the most traded stock, while Sandisk, despite being a fraction of the size, isn’t far behind.

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If you had any doubt whether traders are hungering for more AI trades to bite into, yesterday’s IPO of Cerebras is your answer. 

Cerebras Systems increased the expected price (and size) of its long-awaited initial public offering from a range of $115 to $125 at the start of the week all the way to $185, raising $5.5 billion.

But it opened at a whopping $350 in its Nasdaq debut, giving the company a market cap of at least $75 billion — and more than that on a fully diluted basis.

• “Pretty good day, huh?” CEO Andrew Feldman said in an interview on Bloomberg TV, after being told the stock was indicated to open at $350.

• The IPO was more than 25x oversubscribed, per Feldman. With investor appetite like this, it’s little wonder that SpaceX, OpenAI, and Anthropic are champing at the bit to join Cerebras in making this leap.

• Cerebras, an AI chip designer, counts OpenAI and Amazon among its customers. Its offerings aim to provide more of a one-stop shop for AI compute rather than a highly specialized key ingredient in the data center stew. That is, its wafers are physically much larger than GPUs, which can unlock more efficiencies in moving around information.

“There’s just an extraordinary demand right now for fast inference,” Feldman said. “We’re the fastest, not by a little bit, but by more than an order of magnitude — we’re 15x faster than the next nearest competitor.”

And as CEO of this newly public company, which closed its first day of trading at ~$312, Feldman himself is about $3 billion richer, thanks to his roughly 5% stake.

The Takeaway

There’s a massive investor appetite for AI semiconductor plays that offer a credible alternative to Nvidia, and while it was a long and winding road for Cerebras, the timing seems finally right to IPO… if you’re an AI-related company, that is. Three crypto firms just paused IPO plans, as the “appetite has been sold to AI.” 

Meanwhile, the excitement for SpaceX’s IPO keeps growing, just like the valuations for the two biggest nonpublic AI companies, OpenAI and Anthropic, which are each nearing $1 trillion.

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A 44-page report titled “Points of Attack: Uncovering Cyber Threats and Fraud in Loyalty Systems” looks like many others that management consultancy EY publishes every year. 

There’s just one problem: it’s “riddled with hallucinations,” according to Edward Tian, cofounder of GPTZero, an AI-detection firm that shared its investigation exclusively with Sherwood News.

• Included in the report’s references are citations to a broad range of articles and reports that appear not to exist. One link to a WIRED story, titled “AI Voice Deepfakes Targeting Call Centers,” returns a 404 error. A second, to a story purportedly titled “AI Security Gaps,” also leads nowhere. A link to a CyberNews report does the same.

• In all, GPTZero’s investigation alleges that 60% of the references in EY’s report are hallucinated.

• EY isn’t the only organization to face this kind of issue. GPTZero has previously reported on issues, including 19 hallucinations, in a report published by Deloitte, an EY competitor.

The Takeaway

“There is the technical reason why this is happening, and the societal reason why this is happening,” said Sandra Wachter, professor of technology and regulation at the Oxford Internet Institute at the University of Oxford. The technical reason is perhaps the simpler one: AI remains unintelligent.

Yet people don’t think so when they use it, which leads to the societal reason for the embarrassing snafu. “It’s just not built for truth, and it’s very convincing, and so very persuasive, and also designed to be persuasive,” Wachter said. She has a name for it, too.

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What was the best day of your life? While you think of it, we know what X user @cprkrn would say: Wednesday, when Anthropic’s Claude Opus 4.7 helped him finally access 5 bitcoin after being “locked out 11+ years because I got stoned and changed the password.”

How it worked

• Premarket earnings: Alaska Air