Cerebras IPO Pops 53 pct Thursday: AI Chip Bubble Now Rivals 1700s French Stocks by Valuation

Cerebras Technologies made a stunning market debut Thursday, surging 53 pct on its first day of trading and becoming the latest in a parade of AI chip IPOs that has drawn sharp warnings from veteran investors about valuation excess and speculative fervor. The chipmaker, which competes directly with Nvidia in large-language-model training acceleration, entered at a valuation that has already attracted comparisons to the dot-com bubble by some historical measures. CNBC's Carter Worth noted that the AI chip sector's price-to-sales multiples now rival the French stock market of the 1700s (before the Mississippi Company collapse), while others compared the fervor to the Nasdaq during peak 2000 exuberance.

Cereabras' IPOInitial Public Offering - a company's first public sale of stock. was closely watched as a barometer of retail and institutional appetite for AI competition to Nvidia. The fact that it popped 53 pct suggested that institutional allocators are either dramatically underpricing execution risk or that FOMOFear Of Missing Out - buying because others are profiting. around AI infrastructure has overwhelmed fundamental valuation discipline. Jim Cramer warned that Cerebras' success could crowd out smaller players and that the IPO pipeline could become 'destructive' for the broader market if valuations continue to untether from revenue growth. SpaceX and OpenAI are now expected to file for IPOs soon, and multiple sources noted that these mega-valuations could trigger a sustained retail speculation phase similar to 2021's meme stockA stock whose price is driven primarily by social media-fueled speculation. cycle.

However, proponents counter that the AI capex cycle is in its infancy and that valuations, while elevated, are justified by the structural inevitability of trillion-dollar infrastructure spending. Demand from cloud providers (AWS, Azure, Google Cloud) is undeniable, and supply constraints mean that even modest players can command premium multiples. The Roundhill Memory ETFExchange-Traded Fund - a basket of securities trading like a single stock. (DRAM) reached a record $10 billion in assets at the fastest pace ever for an ETF, signaling that professional money is flowing into AI infrastructure beneficiaries across the supply chain.

The risk is binary: if enterprise AI capex spending growth decelerates even slightly from current expectations, the valuation multiples on Cerebras and other IPOInitial Public Offering - a company's first public sale of stock. entrants will compress sharply. Conversely, if capex cycles prove as durable as management teams claim, early entrants could deliver generational returns. The next test will come from Nvidia's May 20 earnings call, where guidanceCompany-issued forecasts of future financial performance. on enterprise spending will reset expectations for the entire competitive landscape.