Cerebras Systems Inc.'s share price advanced on Monday after several Wall Street brokerages initiated coverage with positive ratings following the quiet period's conclusion, endorsing the chip designer's unconventional AI strategy weeks after its strong market debut.
Shares of Cerebras climbed 3% to $207.54, with at least nine brokerages—including IPO lead underwriters Morgan Stanley, Citigroup, Barclays, and UBS—beginning coverage of the stock.
The California-based company designs wafer-scale engine chips roughly the size of a dinner plate, aiming to accelerate processing speeds and challenge traditional GPU-based systems like those from NVIDIA that rely on interconnected clusters of chips.
Morgan Stanley analysts, led by Joseph Moore, who assigned an "Overweight" rating to the stock, noted that as AI workloads become increasingly reliant on inference capabilities, the demand for fast, low-latency inference is growing rapidly.
They described the investment as a rare opportunity to back a company with a first-mover advantage in AI processors that can compete with NVIDIA, with significant potential for stock appreciation as the field evolves.
According to data compiled by LSEG, Citigroup forecasts Cerebras's stock to reach $340 within the next 12 months.
IPO underwriters are permitted to publish related research reports 25 days after a stock's listing.
Cerebras's clientele includes Amazon.com and OpenAI, and it has also secured investment from the ChatGPT developer and Japanese investment giant Softbank Group Corp. Reports indicate Softbank previously attempted to take the company private before its listing.
Cerebras went public on the Nasdaq over three weeks ago, with its closing price approximately 70% above its $185 IPO price.
However, its shares have since declined more than 30%, partly due to concerns over excessive gains in global tech stocks and as investors have priced in a more hawkish monetary policy from the U.S. Federal Reserve for the remainder of the year amid Middle East tensions.
The Philadelphia Stock Exchange Semiconductor Index has surged 68% this quarter and is on track for its largest quarterly gain since January 2000.
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