Cerebras IPO Sets Up Test for Secondary-Market Valuations

Cerebras Systems' planned initial public offering will test the reliability of secondary-market pricing.

Cerebras Systems' planned initial public offering could be putting secondary pricing and public-market valuations on a collision course. How public markets price the artificial-intelligence chip manufacturer may provide an important test for the reliability of secondary-market pricing.

Public-market valuations are based on readily available financial fundamentals. Private secondary investors, on the other hand, are typically working with fewer data points, often pricing assets based on hype, momentum, gut feeling and even hope. They also pay a premium for a limited supply of shares, placing additional upward pressure on secondary prices.

Trading activity for Cerebras, which manufactures plate-size processors to slash AI training time and run high-speed predictions needed to enable real-time digital agents, has been relatively limited. The secondary exchange data aggregator Caplight shows 41 closed trades for the company over the past year.

Still, Cerebras has seen a 5% boost in share price since its IPO announcement and, as of April 24, shares were trading at a 28% premium to its Series H valuation. This would give the company a valuation of $29.4 billion compared with its last round of $23 billion, according to Caplight.

Darian Shirazi, managing partner at Gradient, said he personally bought shares of Cerebras on the secondary market two months ago at $100 a piece. The trade represented a roughly 12% premium to its latest funding round, but Shirazi is bullish on the company and thinks Cerebras could be a $100 billion company in the near future.

"If you believe that the AI inference market is infinitely sized, which I do, this is going to be the chip that is the standard for inference," he said. "The future value here seems to be significantly larger than what we're reporting today and the limitation is how quickly they can manufacture the chips."

Rapid growth at Cerebras isn't unprecedented. Between its Series G round at the end of September and the most recent Series H round in February, its post-money valuation grew from $8.1 billion to $23 billion, according to company documents. The expansion represents a 184% increase in just over four months.

The valuations are bulwarked by new information from Cerebras's pre-IPO filings with the SEC showing company revenue grew 76% between 2024 and 2025 to $510 million. The company believes the combined market for AI training infrastructure and inference could reach $672 billion by 2029.

"If the IPO does go well, it will really validate higher private-market prices for the concentrated group of equivalent names," said Isabelle Freidheim, founder and managing partner of Athena Capital, which isn't an investor in Cerebras. "That public-market indication will trickle into the secondary market."

Jay Ritter, director of the IPO Initiative at the University of Florida, isn't getting his hopes up. He uses price-to-sales ratio, a statistic that puts valuation over revenue, as a leading indicator of IPO success. Too high and investors should brace for disappointment.

At a $29.4 billion valuation on the secondary markets, Cerebras's price-to-sales ratio is 58.

"For companies that have gone public at a price-to-sales ratio of over 40 and at least a hundred million dollars of inflation-adjusted trailing revenue, on average they have underperformed," Ritter said. "All of them were companies where there's a really good story about what a great company it is."

The average return from first close for 46 companies meeting that criteria between 1987 and 2024 was minus 44.8%, according to research from Ritter. The list includes numerous high-profile companies including cloud data platform Snowflake, social-media company Snap, data-streaming company Confluent and cybersecurity provider SentinelOne.

"There was a reason that the market was willing to give them very high valuations but, you know, everything has to go right," he said.

Cerebras declined to comment on secondary valuations, its IPO or valuation targets, but the company's outsize growth numbers have created a surge in demand on secondary exchanges.

Caplight data shows the percentage of bidders for its stock has grown from 35% of all volume in February to more than 80% in April as investors look for a last-minute entry into the company.

For secondary exchanges with limited activity that also means sellers have become more scarce as shareholders grow more patient, holding out for a price pop from the public offering.

"The ones who are sellers in the secondary markets are also looking at the confidence signals companies are giving out. They're like, 'Why should we sell now? Maybe let's wait, it's about to go public,'" Manthan Shah, a principal at WestBridge Capital, said. "So, the signal gets kind of worse the closer you get to the IPO."

Write to Jon Leckie at [email protected]

Corrections & Amplifications

Darian Shirazi, managing partner at Gradient, said he thinks Cerebras Systems could be a $100 billion company in the near future. An earlier version of this article incorrectly said he thinks Cerebras could be a $100 million company. (Corrected on April 27)