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Welcome back! When some journalist writes the book on the AI boom, one critical chapter will start on Christmas Eve 2025. That was the day that Nvidia and OpenAI’s complicated frenemy relationship became incredibly lucrative for chip startups that focus on AI inference. We already know that Christmas Eve was the day the tech industry (and this newsroom) scrambled to make sense of the news that Nvidia would spend billions of dollars for chip startup Groq and its founder, an inventor of Google’s tensor processing units. Now, thanks to securities filings, we also know it was the date that OpenAI decided to commit billions of dollars to buy chips from Groq rival Cerebras, which makes dinner-plate–size chips that can run AI models rapidly. The OpenAI-Cerebras deal wasn’t announced until January, but the “master relationship agreement” tucked into Cerebras’ IPO filing is dated Dec. 24, 2025. I’d love to see the Signal chats between OpenAI CEO Sam Altman and Nvidia CEO Jensen Huang from that date. (OpenAI lawsuits these days are setting a high bar.) That Christmas Eve date has had a ripple effect on the market. In March, Nvidia announced to great fanfare plans to incorporate Groq technology into its graphics processing unit chip systems, which would help AI coding tasks run faster. Similarly, speed of AI inference is driving Cerebras’ IPO this Thursday, which has been wildly oversubscribed. It will also mint billions on paper for OpenAI, which stands to own about 3% of the company in the coming months and could own 11% as it buys more compute capacity from Cerebras. (I published an in-depth story about OpenAI’s supplier stock deals on Tuesday.) Add it all up, and the IPO could value Cerebras—a company worth just $4 billion a year and a half ago when it first tried to go public—above $50 billion. It is expected to raise more than $5 billion in the IPO, which would make it the largest semiconductor public listing of all time, according to data from Dealogic as well as an analysis of Cerebras’ latest IPO filing. For investors, this IPO would give them a slice of a big, fast-growing OpenAI partner. Cerebras also has a meaningful partnership lined up with Amazon Web Services. By 2028, the company’s revenues could be near $8 billion, Morgan Stanley has told investors, up by more than 20 times last year’s sales. Cerebras’ Warnings But the competitive, cutthroat nature of this chip market—and the uncertain future of what will power AI overall— makes me think that investors would be making a mistake trying to chase Cerebras’ stock as it goes public. The company’s promise is real, but the market is overlooking too many uncertainties for Cerebras right now. Don’t take my word for it. The risk factors outlined in Cerebras’ IPO prospectus lay out the issues clearly. While these caveats are standard legal warnings, Cerebras’ are useful to reflect on amid an investment fervor. First, there are “well-funded” competitors “that have active merger and acquisition pipelines” as well as customers “may acquire or form alliances with our competitors, thereby reducing their business with us.” In other words, this is a market of giants who are ready to knife each other for market share and profit margins. Cerebras could get caught in the crossfire. Then there’s the relationship with OpenAI. The $20 billion deal OpenAI signed with Cerebras on Christmas Eve for 750 megawatts of AI compute capacity “represents a substantial portion of our revenues over the next several years,” Cerebras wrote. But read the fine print. “OpenAI has the right to terminate a portion or all of the agreement” if Cerebras fails to deliver on its end of the bargain. And that risk isn’t remote. While Cerebras is a nine-year-old firm, its cloud computing business is nascent, dating back only to the fall of 2024. Before, it was just selling large hardware systems. Cerebras didn’t generate meaningful revenue until 2023, and those sales came largely from one or two customers in the Middle East. To build a cloud service, Cerebras’ business will dip deeply into the red to build out data centers. Morgan Stanley believes Cerebras will burn $3 billion in 2026 and 2027, according to financial figures the bank shared with prospective investors. All of this may lead to a rough road ahead, the company warned in its prospectus. “We have encountered, and will continue to encounter, challenges in compute capacity planning and allocation, as well as accurate financial planning and forecasting with the changing mix of offerings in our business model,” it wrote. Add it all up, and investors seem overly excited—like kids on Christmas Eve. The next day sometimes ends in disappointment.
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