Cerebras shares tumbled nearly 20% this week to their lowest level since the company's May IPO, pressured by a report that Nvidia will power part of OpenAI's newest model and by expiring insider share lockups. OpenAI CEO Sam Altman then moved to reassure markets about the companies' partnership, sending the stock up in after-hours trading.
Cerebras stock closed Friday at $166.43, its lowest price since the chipmaker's IPO in May. The drop came after research firm SemiAnalysis reported that Nvidia, not Cerebras, will power OpenAI's "Ultrafast" mode for the GPT-6.1 Sol model. As a result, Cerebras shares are now down by more than half since their initial pop on debut day.
Market cap shrinks after a record debut
The company closed its first trading day at a $95 billion market cap, just shy of valuations that Meta, Alibaba and SpaceX reached on their own debut days. The company's market cap now sits at just over $39 billion. In January, Cerebras had struck a deal worth over $10 billion with OpenAI to supply 750 megawatts of computing power through 2028. Investors had been excited by the prospect of an alternative to Nvidia to power AI.
Altman moves to calm the market
However, the stock rose almost 3% in extended trading on Friday after Altman addressed rumors about the companies' partnership. According to CNBC: "Cerebras is a close partner, and we have a deep engagement", Altman wrote in a post on X.
Altman has also been a personal investor in Cerebras since at least February 2017, owning approximately 89,373 shares, Crypto Briefing reported. OpenAI is spreading its bets across Nvidia, AMD and Cerebras, with each supplier now competing for the flagship launches that prove its deals matter, according to Crypto Briefing.
Insider selling adds to the pressure
Beyond the Nvidia report, the stock faced pressure from expiring post-IPO restrictions. Up to 19.4 million shares held by directors, officers and other insiders unlocked on Wednesday, equal to 8% of total shares outstanding, while up to 14.6 million additional shares have unlocked every two weeks since Aug. 19. CEO Andrew Feldman and CTO Sean Lie sold over $240 million of Class A shares between Aug. 20 and Sept. 25 under trading plans adopted after the IPO.
The selloff exposed Cerebras' customer concentration: one buyer accounts for a contract large enough that every rumor about it moves the stock, Crypto Briefing reported. Analysts believe the market overstated the risk, since the OpenAI agreement is multi-year and one model's initial deployment choice does not rewrite a three-year purchase commitment, according to Crypto Briefing.
Sources: CNBC, Crypto Briefing
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