AI Race: Cerebras Systems Emerges Stronger As Potential Rival to Nvidia, But Who’s G42?

Cerebras Systems, a rising player in the AI hardware space, is looking to challenge Nvidia’s dominance as it gears up for a major IPO. Nvidia, whose chips are crucial for training AI models like OpenAI’s ChatGPT, has seen its market value soar nearly 600% since ChatGPT’s rise. However, Cerebras, backed by investors like Altimeter and Benchmark, aims to capitalize on the AI boom with its own advanced processors.

Cerebras specializes in producing large arrays of processing cores with super-fast memory. Its revenues hit $136 million in the first half of 2024, nearly double what it made in 2023. While the company is still unprofitable, it has managed to reduce its operating losses significantly. It now seeks to raise $1 billion in its IPO, potentially valuing the company between $7 billion and $8 billion.

However, there’s a catch—97% of Cerebras’ sales this year come from a single customer, G42, an AI developer based in Abu Dhabi. G42 is not only its top buyer but also a major investor, making the relationship complicated. G42 has committed to spending $1.4 billion on Cerebras technology, a deal that guarantees growth but raises concerns about the company’s dependency.

Cerebras is trying to expand, having recently signed a deal with Saudi Aramco. However, risks remain, especially with U.S. national security regulators who could block exports due to concerns over sensitive AI technology.

While Cerebras has made strides, its research spending—$155 million annually—is a fraction of Nvidia’s $3 billion per quarter. Investors may be drawn to Cerebras as a potential Nvidia rival, but the company’s reliance on a single customer and its slower pace of innovation could pose challenges in the highly competitive AI chip market.