Chip Startup Cerebras Eyes $3B IPO Filing Today - What's The OpenAI Connection?

• Cerebras is aiming for a valuation of $35 billion in the IPO.
• Cerebras announced a three-year deal with OpenAI in January, and its size is now pegged as larger than previously indicated.
• Some investors and observers have raised concerns about the growing number of circular deals in the AI space.

OpenAI is spending over $20 billion for chips and compute from startup Cerebras Systems, double the among previously associated with the deal, The Information reported on Thursday, citing its sources.

Cerebras is preparing to go public – its second attempt – and is expected to make public the IPO paperwork as early as Friday, according to the report. The company is expected to raise more than $3 billion and is targeting a valuation upwards of $35 billion.

The developments are being closely watched as AI data center buildouts accelerate, boosting the fortunes of server chipmakers and other component suppliers. OpenAI and AI chip giant Nvidia are also under scrutiny for what many see as circular deals—investment-cum-purchase partnerships—that help sustain demand for their services.

OpenAI, which is itself preparing to go public this year, first announced a tie-up with Cerebras in January. The AI startup agreed to purchase 750 megawatts over three years, reportedly for $10 billion. Now, according to The Information’s reporting, the deal is pegged at between $20 billion and $30 billion and also involves OpenAI receiving warrants for up to 10% stake in the company.

“Stock manipulation to help Cerebras price higher at IPO. Little if any money ever changes hands,” tech critic and writer of the Where's Your Ed At newsletter Ed Zitron said on X.

What Does Cerebras Do?

Founded in 2015, Cerebras builds specialized AI chips and supercomputers designed to train and run large AI models faster than traditional GPU setups, along with software and cloud services to support them. 

It positions itself as a simpler, high-speed alternative to Nvidia by using a single massive chip rather than many smaller ones. Recently, it has been expanding into AI cloud services, opening new data centers, partnering with big tech firms, and securing large compute deals.

Cerebras first filed for a public listing in September 2024 and then decided to withdraw its plan and raise $1.1 billion privately in October of that year.

Retail Interest In OpenAI Ahead Of IPO

OpenAI recently raised $122 billion, the largest equity funding round in history, and for the first time offered its stake to retail investors. In the round, about $3 billion was raised from individual investors and $240 million from Ark Investment Management’s funds, ARK Innovation (ARKK), ARK Fintech Innovation (ARKF) and ARK Next Generation Internet (ARKW). 

The Cathie Wood-run funds have become more popular of late due to their shareholding in marquee pre-IPO tech firms such as SpaceX and Anthropic.

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