Should Investors Buy Cerebras Stock After Its Monster IPO Debut?

There was a lot of hype heading into Cerebras' (NASDAQ: CBRS) initial public offering, and so far, the stock has lived up to expectations.

Cerebras began trading on the Nasdaq Composite today. With the IPO officially priced at $185 per share, Cerebras had an implied valuation of over $56 billion, according to Reuters.

The stock finished the day up over 68%, bringing its market cap to nearly $95 billion.

Cerebras raised $5.55 billion and sold 30 million shares, making it the largest U.S. tech IPO since Uber back in 2019, according to CNBC. Underwriters also had the option to exercise 4.5 million additional shares, potentially bringing the raise to $6.38 billion.

Cerebras makes graphics processing units (GPUs) that are supposedly 15 times faster than other leading GPUs. Should you buy the stock after its monster IPO debut?

The pros and cons of a larger chip

Cerebras builds full-stack AI infrastructure solutions. The big differentiator is that the company makes extremely large chips. While most GPU companies like Nvidia make chips from small pieces of a wafer, Cerebras uses the entire wafer.

According to the company's registration statement, Cerebras' wafer-scale engine (WSE) can replace an entire GPU cluster by combining 900,000 compute cores and 44 gigabytes of on-chip memory onto a single chip.

Image source: Getty Images.

This makes its WSE-3 model 58 times larger than Nvidia's B200 model, which is part of the company's Blackwell line, although not the fastest Blackwell model. The WSE-3 also supposedly has 250 times more on-chip memory and 2,625 times more memory bandwidth than the B200.

Having more memory on a chip means there's less need to fetch data from external memory or other GPUs, which is why Cerebras chips are faster for certain tasks. However, given that they are larger and more concentrated, there is less flexibility than with smaller GPUs.

Cerebras' WSE is then placed inside Cerebras' CS-3 system, which is specifically engineered for data centers and running AI solutions. The system provides power delivery, cooling, networking, and system management, so multiple CS-3 systems can be connected and run at scale.

The company also develops a software platform to pair with the infrastructure, so large language models (LLMs) can be trained, programmed, and orchestrated across large clusters.

Cerebras can provide its hardware to companies on-premise and in the cloud. The company rents space from third-party data centers in California, Oklahoma, and Canada for its own cloud, and also partners with other cloud providers like Amazon, Microsoft, and IBM, among others, to provide its high-speed inference services.

Should you buy the stock after the big run?

In 2025, Cerebras grew total revenue by about 76% from 2024 to nearly $510 million. Hardware revenue accounted for 70% of total revenue, with the rest from cloud and other services, which grew 95% year over year. The company reported an operating loss of nearly $146 million in 2025 and had a gross margin of 39%.

Trading at roughly 187 times trailing revenue, the stock is undoubtedly expensive. Obviously, the company has tremendous promise and can likely continue to grow revenue fast, but I would caution investors from jumping in just yet.

This is primarily because there are lock-up provisions that prevent most of the company's executive officers, directors, and other shareholders who acquired shares prior to the IPO from selling all or most of their shares for at least a few months.

That's not to say they will completely dump their shares as soon as they have the chance, but many will look to sell at least some to reap the rewards of their hard work or early investment, which they could have been holding for many years.

Given the large multiple and the big jump in the stock, I would recommend patience for now. Investors will get more information when Cerebras releases its first-quarter earnings report and when lock-up provisions start to expire.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, International Business Machines, Microsoft, Nvidia, and Uber Technologies. The Motley Fool has a disclosure policy.