Cerebras IPO Timeline Clouded Amid Nvidia Sell-Off
Cerebras IPO Timeline Clouded Amid Nvidia Sell-Off
Will a listing come in 2024 as chip stocks plummet?
- The Cerebras IPO is in doubt amid the chip sector sell-off.
- Its listing appears likely to be pushed back if losses continue.
- The IPO market recovery remains unsettled following market volatility.
The initial public offering (IPO) market for the rest of 2024 has been thrown into doubt after the latest wave of market volatility. Technology stocks, particularly chip makers, continue to suffer from the hit taken from the latest sell-off. That is bad news for technology stocks planning to go public.
Cerebras, the artificial intelligence chip maker, announced IPO plans last month. They were rev ealed by its confidential filing with the Securities and Exchange Commission (SEC). The company is seen as a potential challenger to Nvidia (NVDA), with its cutting-edge wafer-sized chips.
Nvidia downturn hurts Cerebras
The latest hit to an anticipated Cerebras IPO came on today, with Nvidia dropping over 8% through mid-day trading. Traders were largely unimpressed with its latest earnings report, which beat street expectations but failed to sway investors to pump the stock higher.
It isn’t just Nvidia, either. SMH, the VanEck Semiconductor ETF, fell over 7% as of this afternoon. Other big chip names, like Intel (INTC) and Advanced Micro Devices (AMD), were also down big, signaling the headwinds in sentiment faced by the sector. SMH traded at the lowest level since Aug. 12 and has wiped out over half of its gains from the early August swing low of 200.49, which was the lowest mark since April 2024.
Nvidia posted revenue of over $30 billion, driven by its lucrative data center business. Demand for chips has surged over the past year, as companies like Microsoft (MSFT) and Amazon (AMZN), among others, spend heavily to build up their AI capacity.
IPO postponement likely
The leadership at Cerebras will likely be dissuaded from listing at a time when chip stocks are falling because it would work against achieving the highest possible valuation. While it’s still too early to take an IPO off the table for later this year, the prevailing sentiment doesn’t bode well for a Cerebras launch, and it isn’t great for the broader IPO market.
Market conditions put a lot of doubt into the IPO market for the rest of 2024. Can they turn around and support listing? Sure, but the longer volatility in the space continues, the less likely we are to see a Cerebras listing this year.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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