Cerebras stock plummeted nearly 20% this week to its lowest price since the company's monster IPO in May, after a report that chip giant Nvidia will power a crucial piece of OpenAI's latest model.
Research firm SemiAnalysis posted on X on Wednesday that OpenAI will power its "Ultrafast" mode for GPT-6.1 Sol with Nvidia graphics processing units instead of Cerebras hardware. Cerebras shares are now down by more than half since their initial pop that followed the company's debut on the Nasdaq.
The stock, which closed on Friday at $166.43, was also under pressure this week due to the expiration of post-IPO restrictions on some insider shares.
It's a significant fall from grace for Cerebras, which closed at a $95 billion market cap on the first day of trading, just shy of joining the ranks of Meta, Alibaba and now SpaceX, which closed their initial day with valuations over $100 billion.
Cerebras' market cap now sits at just over $39 billion.
Investors were excited by the prospect of an alternative to Nvidia to power AI. Cerebras makes dinner plate-sized ASICs, or a custom microchip built for inference workloads, and leases them from inside its own data centers as a cloud service. In January, Cerebras struck a deal worth over $10 billion with OpenAI to supply it with 750 megawatts of computing power through 2028.
Losing OpenAI inference to Nvidia has put a damper on that exuberance. According to McKinsey, inference is set to surpass training as the most dominant workload in AI data centers by the end of the decade.
Meanwhile, as more time passes from the IPO, additional shares will hit the market. According to the company's prospectus, up to 19.4 million shares held by directors, officers, non-executive employees, and non-employee holders unlocked on Wednesday. That's equal to 8% of total shares outstanding.
Prior to that, up to 14.6 million shares have been unlocked for sale every two weeks since Aug. 19.
CEO Andrew Feldman and CTO Sean Lie, both minted billionaires by the IPO process, sold over $240 million of Class A shares between Aug. 20 and Sept. 25 under trading plans adopted shortly after the IPO. Other executives have also sold shares valued in the millions.
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