Nvidia competitor Cerebras may postpone IPO amid national security review - Reuters
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 08 2024
0mins
Should l Buy NVDA?
Source: SeekingAlpha
IPO Postponement: Artificial intelligence startup Cerebras Systems is likely to delay its initial public offering due to a national security review concerning G42's minority investment in the company.
Investment Concerns: The ongoing review process is impacting Cerebras' plans, leading to uncertainty about the timing of their IPO.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 225.830
Low
200.00
Averages
264.97
High
352.00
Current: 225.830
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Nvidia's Opportunities and Challenges in the Chinese Market
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- Manufacturing Recovery Signals: CEO Jensen Huang indicated at the GTC conference that the company has received purchase orders and is restarting manufacturing, suggesting a gradual recovery of its business in China, which could positively impact future sales.
- Investor Focus: With Nvidia set to report earnings, investors are eager for updates on the company's China business, particularly in light of Huang's participation in Trump's summit, raising market expectations about Nvidia's ability to restart sales in the world's second-largest economy.
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- Oversubscription Phenomenon: The IPO was oversubscribed by more than 20 times, reflecting market enthusiasm for next-gen AI hardware, despite its price-to-sales ratio exceeding 110x, far above traditional metrics.
- Significant Sales Growth: Cerebras reported $510 million in sales last year, a notable increase from $290.3 million in 2024, indicating rapid growth in the AI infrastructure market.
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- Current Sales Restrictions: Nvidia's sales of AI chips in China are constrained, with only small amounts of H200 products approved, and CFO Kress indicating no revenue has been generated yet, highlighting the significant impact of U.S. export restrictions on business operations.
- Optimistic Market Signals: CEO Jensen Huang announced at the GTC conference that the company has received purchase orders and is restarting manufacturing, suggesting an improvement in sales prospects in China, which could positively influence the upcoming earnings report.
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- Market Access Restrictions: Nvidia's ability to sell advanced AI chips in China has been constrained by export restrictions imposed by the Biden administration for national security reasons; although small amounts of H200 products have been approved for export, no revenue has been generated, indicating market uncertainty.
- Manufacturing Recovery Signals: CEO Jensen Huang indicated at the GTC conference that the company has received purchase orders and is restarting manufacturing, suggesting a gradual recovery of its business in China, which could positively impact future sales.
- Investor Focus: With Nvidia set to report earnings, investors are eager for updates on the company's China business, particularly in light of Huang's participation in Trump's summit, raising market expectations about Nvidia's ability to restart sales in the world's second-largest economy.
- Competition and Dependence: Cramer noted that while China faces the choice of relying on Nvidia's technology or accelerating its own development, Nvidia remains an attractive investment due to its dominant position in AI and comparatively inexpensive valuation relative to peers.
See More
Cerebras IPO Marks Major Milestone for AI Chip Industry
- Record-Setting IPO: Cerebras lists on the Nasdaq Global Select Market with a share price of $185, raising approximately $5.6 billion, marking the largest IPO of the year and highlighting strong investor interest in AI hardware firms.
- Oversubscription Phenomenon: The IPO was oversubscribed by more than 20 times, reflecting market enthusiasm for next-gen AI hardware, despite its price-to-sales ratio exceeding 110x, far above traditional metrics.
- Significant Sales Growth: Cerebras reported $510 million in sales last year, a notable increase from $290.3 million in 2024, indicating rapid growth in the AI infrastructure market.
- Strategic Partnerships: The company has partnered with OpenAI to integrate its technology into OpenAI's computing systems, further solidifying its competitive position in the AI chip sector.
See More
Cerebras IPO Shows Strong Performance
- Cerebras IPO Performance: Cerebras Systems' IPO was priced at $185, reaching a high of $386.34 at opening, and settling at $311.07, indicating strong market interest in its AI chips and likely attracting more investor attention.
- Stock Price Fluctuation: After hours, Cerebras' stock rose by 5% to nearly $330, reflecting investor optimism about its growth potential and confidence in the company's valuation amidst a competitive landscape.
- Market Reaction: CNBC's Jim Cramer noted that the timing of this IPO was impeccable, with investors' decisions at current valuations showcasing confidence in the company's future, potentially paving the way for more similar IPOs.
- SpaceX Governance Risks: Concerns about SpaceX's IPO governance structure, including super voting shares and mandatory arbitration for shareholder claims, may deter long-term investors, impacting its market performance and raising questions about transparency and accountability.
See More
High-Stakes US-China Talks Capture Market Attention
- US-China Leadership Meeting: Chinese President Xi Jinping and US President Donald Trump met on May 14, 2026, in Beijing to discuss sensitive issues including Taiwan, with Xi warning that mishandling could lead to conflict, highlighting the tense state of bilateral relations.
- Positive Market Reaction: Asia-Pacific markets were poised to rise, with Nikkei 225 futures at 63,100, up from the previous close of 62,654.05, reflecting investor optimism regarding the outcomes of the high-stakes talks.
- Strong US Stock Performance: The Dow Jones Industrial Average surged by 370.26 points to close at 50,063.46, driven by robust earnings reports, while the S&P 500 and Nasdaq Composite also reached all-time highs, indicating strong market confidence in economic recovery.
- Strategic Implications of Taiwan Issue: Xi emphasized the sensitivity of Taiwan independence, warning that mishandling could jeopardize US-China relations, suggesting that future negotiations on this issue will have significant implications for global markets.
See More
Cramer Advocates for Nvidia to Sell AI Chips in China
- Strategic Technology Dependency: Cramer argues that allowing Chinese companies to purchase Nvidia's AI chips will keep them reliant on U.S. technology, thus avoiding the risk of them developing competing products, a strategy that could significantly impact the future of U.S.-China tech competition.
- Current Sales Restrictions: Nvidia's sales of AI chips in China are constrained, with only small amounts of H200 products approved, and CFO Kress indicating no revenue has been generated yet, highlighting the significant impact of U.S. export restrictions on business operations.
- Optimistic Market Signals: CEO Jensen Huang announced at the GTC conference that the company has received purchase orders and is restarting manufacturing, suggesting an improvement in sales prospects in China, which could positively influence the upcoming earnings report.
- Investment Appeal: Cramer emphasizes that despite uncertainties in the Chinese market, Nvidia remains an attractive investment due to its dominant position in AI and comparatively low valuation, especially when evaluated against the newly public Cerebras.
See More
Technology Stocks Propel Market Gains Amid Strong Earnings
- Strong Tech Performance: Technology stocks led market gains with Cisco's shares jumping 13% following robust management commentary, while Nvidia hovered near a $6 trillion market cap, reflecting strong investor confidence in the tech sector.
- Retail Sales Growth: U.S. retail sales rose 0.5% month-on-month in April, marking the third consecutive month of growth, indicating resilient consumer demand despite inflationary pressures, thereby boosting market sentiment.
- Dow Jones Index Surge: The Dow Jones Industrial Average rose by 370.26 points, or 0.75%, closing at 50,063.46, driven by strong corporate earnings and a revival of interest in AI themes, which enhanced investor sentiment.
- Rising Global Oil Prices: Brent crude oil prices remained firm above $105 per barrel, as the International Energy Agency warned that ongoing disruptions in the Middle East could keep global oil supply below demand until 2026, providing support for oil prices.
See More
