CNBC’s Jim Cramer cautioned investors against chasing shares of Cerebras Systems after its explosive market debut Thursday.
“While there might be a situation in the future where I can recommend Cerebras, I just can’t even come close to justifying the valuation up here given how much it’s already run right out of the gate,” the “Mad Money” host said. “For now, I say keep your bat on your shoulder and hope the stock gives you a giant pullback. Because at these levels, it’s too rich for me.”
Cerebras debuted Thursday in the largest IPO of the year. The AI chipmaker priced shares at $185 Wednesday, above its already raised range of $150 to $160, before opening at $350 Thursday. Shares ended the day at $311, putting its market capitalization at roughly $95 billion. At its peak, the stock touched $386 on Thursday.
The excitement is not entirely unfounded, according to Cramer. Founded in 2015, Cerebras built what it calls “the largest commercial chip in the history of the computer industry.” The processor is made from an entire silicon wafer and designed specifically for artificial intelligence workloads. In its IPO prospectus, Cerebras said its processors can be “up to 15 times faster than leading GPU-based solutions” for certain workloads and “more than 10 times faster” in some AI training applications.
Cramer also pointed to Cerebras’ several high-profile partnerships that could help drive future growth. Earlier this year, the company announced a $20 billion multiyear agreement with OpenAI to provide 750 megawatts of computing capacity, while Amazon Web Services recently agreed to deploy Cerebras chips alongside its own Trainium processors. Amazon and OpenAI both have warrents to purchase Cerebras stock.
Revenue growth has also been strong, Cramer noted. Cerebras generated $510 million in revenue last year, up 76% from a year ago, after sales more than tripled in both 2023 and 2024. And while Cerebras remains unprofitable, Cramer said he’s not too concerned because it’s growing so fast and doesn’t have any debt.
However, Cramer said investors should not overlook the risks — most prominently, valuation.
More importantly, he argued, the stock’s valuation looks increasingly stretched following Thursday’s rally. At Thursday’s prices, Cerebras traded at roughly 187 times last year’s sales, compared with roughly 26 times sales for Nvidia, about 21 times for AMD, and roughly 33 times for Broadcom.
“So, really, if you buy this stock up here, you’re betting on the idea that Cerebras will have much better growth for many years in the future,” Cramer said. “Honestly, at this valuation, you’re basically expecting revenue to be several multiples of what it is right now in a fairly short period of time. Maybe that’s possible, given the company’s impressive technology, but that seems like a real leap of faith to me.”
