AI Chipmaker Cerebras Climbs 68% After Year’s Biggest IPO

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1:31Scarlet Fu:Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. I'm going to talk about the new issue market because we had a big IPO this week. Cerebris, I think, is kind of how we figured out how to pronounce it. We've said it every which way. Yes. Bailey's advice to me yesterday went up. He was on TV afterwards. And I said, how do you pronounce this? Because I got to do the story. He goes, just pronounce it both ways. That way they can't accuse you. You say it correctly. As long as you say it correctly, one time that counts.

2:05That's what I believe. Okay, three percent. Anyway, they went public yesterday. $185 was the IPO price. Traded up to like over 300 bucks. Just extraordinary. Trading off 1 % or 2 % here this morning. Bailey Lipschitz, he joins us here. He covers all this IPO stuff and all the equity markets. So, Bailey, if you're looking to go public, this is a good first one to come out the door. I mean, if you're thinking about SpaceX and Anthropic and all those other ones. Yeah, it really does kind of serve as a quite large appetizer, if you will, in terms of just the sheer size of it. Again, north of five and a half billion dollars.

2:40I don't know if we've confirmed that they've exercised the green shoe. You have to imagine that happened almost instantaneously. So this would be the largest chip IPO of all time here in the US. And the big focus is, again, in a few weeks, what happens with SpaceX looking to raise$75 billion and how the market can digest that capital. and just thinking through how that does set the table for an anthropic and open AI potentially later this year, just given that across those three deals, it's pretty much an entire record year of IPO proceeds.

3:10Scarlet Fu:And there was a lot of drama surrounding this IPO because we had reporting that showed Arm Holdings and SoftBank, which owns Arm, the majority owner, wanted to buy this company a couple of weeks before the IPO. Yeah, it's kind of unsurprising for all intents and purposes. The interesting thing from that reporting from Ed Ludlow and team is kind of the question around the cash and stock component. And when you think about the fact that right now, cerebrus, cerebrus, however you want to pronounce it, is about$65 billion in market cap. Yes, Arm is$225 billion, but there is an interesting kind of financial gymnastics that would have had to be kind of accomplished to complete that deal.

3:53And the question then going forward is just how How large would the company be?

3:56Scarlet Fu:I mean, the selling point Cerebrus has, or Cerebrus. Cerebrus. Cerebrus. Okay, let's just say Cerebrus. The benefit it has is that it's an AI chip maker. And that hits on so many different things right now. Is it a competitor to NVIDIA? Yeah, that's how they're billing themselves. But is it actually? Yes, in the future, potentially. I mean, it goes back to like, what is a TPU? And how does the market kind of evolve over time? I mean, the big debate when you talk to folks on the buy side, whether they were interested or not in Cerebros in 2026 or even back in 2024 when they wanted to go public the first time was, OK, how large can this company be if we say NVIDIA is worth six trillion dollars?

4:40Is there a path to 100 billion dollars? Is there a path to 200 billion dollars? And just using essentially basic math is if there is going to be a real competitor for NVIDIA and it is Cerebros, then the valuation can make sense. Again, based on the trailing data, based on what they've actually attained for now, it is one of the most expensive, if not the most expensive. That's kind of where I wanted to go. I mean, we've got a$65 billion market cap trailing revenue,$500 million. Yeah. So, I mean, what are we doing here? Was there any pushback on valuation? I'll answer that. No. No. So we saw them launch initially with a range of like$115 to$125.

5:15As you mentioned, it prices at$185. it according to the people around the deal they had 10 billion dollars of demand before it formally launched which is not something you see the vision going forward though is open ai is now a customer they are diversifying away from g42 which was kind of the one of the bear cases a few years ago for the company so if you're buying into the idea that these hyperscalers are going to spend spend spend then investing in the companies that are actually producing the products that they're selling at least has the upside because they're not going to bear the cost if we are over-indexing and over-building like many people are fearing.

5:50Scarlet Fu:Is there a cornerstone investor in Cerebrus? No, not that I... In my day, we didn't do cornerstone investors. Well, that's a thing in the 2020s. Yeah, we work for a living. Real quick, SpaceX, is that a June thing potentially? Yeah, we expect the formal filing to go public next week. That would set the table. That's going to be a lot of fun for us. I will be on vacation starting Wednesday, so I'm getting out of the country. But yeah, so expecting that formal flip next week, that'll set the stage for a listing likely before Juneteenth. Wow. And then 15 days after that, perhaps an entry into the NASDAQ 100 and the Qs.

6:25Oh, I see what you're saying there. Passive investors need to buy in. I mean, talk about interesting. It's going to be fascinating to watch, I don't know, a double or triple levered SpaceX ETF day three.

6:35Scarlet Fu:There's already filings for all these companies that haven't even gone public yet. There's a levered Cerebros ETF, and it's T plus six hours. Stay with us. More from Bloomberg Intelligence coming up after this.

7:08Scarlet Fu:Learn more at intuit.com slash erp.

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9:04Scarlet Fu:Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's talk a little technology. John Tucker was just reporting on Figma. Let's start there because I have no idea who this company is. Never heard it before. So I'm going to go to Anurag Rana, technology analyst. He gets paid to know about this stuff for Bloomberg Intelligence. Anurag, tell me about what this company Figma is. Why don't I know about it? But they had some some pretty darn good numbers here. Talk to us about Figma. Yes, Paul. So you may remember Figma when Adobe tried to acquire them a few years ago.

9:36It was one of the biggest acquisitions by Adobe. To be honest, I went and criticized Adobe for such a big acquisition with no real revenue. But this is a phenomenal company. It does design software. So if you're designing applications, this is a place where you're going to go design the application and the workflow, and then you're going to get coded with it. They came out public last year, and you've seen the stock down around, let's say, 80 % since then. Because, again, high growth company right in the smack middle of being disrupted by AI models. And, you know, when you had a brand new company, you know, your financials are not the best.

10:10So this has been the one that has absolutely been crushed over the last 12 months. But last night, they showed that the growth rate is actually picking up. Their AI consumption is improving and they are not, you know, they're working closely with large language models and helping out their customers.

10:27Scarlet Fu:And I'm so glad you bring out the point that the stock has gotten absolutely crushed because you take a look at a one year chart on August 1st, 2025. It was trading at one hundred twenty two dollars. And of course, yesterday or, you know, prior to this earnings release, it was trading below twenty dollars. Now it's above 20, but still a long way off from those highs back in the summer of 2025. You had mentioned, Anraag, that Adobe wanted to buy it but was stopped by regulators. Is this a takeover target? Is it still a takeover target for anyone? Well, Adobe would have been the right fit at that time.

11:02And again, I go back and say when it happened, I would really criticize Adobe for it. But I seem now it looks like a very good design software. Now, I don't know if it can be acquired now because, as I said, there was some regulatory issue. In the little market that they operate in, Figma operates in, they actually have very high market share. They are the predominant vendor with very little competition from any of the bigger guys. But here the discussion was, the reason why it got crushed was people said, well, why don't I just go into a cloud or an open AI and start designing my application over there?

11:38And these guys are saying, listen, it's not that simple. You can, you know, coding, you can do it anywhere, but designing requires a different skill set. As I said, they have probably the best product that's out there in that category. Hey, Anurag, to what extent is what we're seeing today in Figma kind of emblematic of what maybe a lot of software companies need to do, which is, hey, you've been people have sold your stock, concerned about the AI competitive threat. The only way to get around that is just to perform and put up good numbers. Is this kind of a template for some of these other software companies?

12:11Yeah, Paul, you really nailed it in the head over there. That's exactly what needs to happen. But it was probably a little easier for Figma because the base of revenue was small. And even one or two, they signed a very large client with one of the hyperscale cloud providers. So what happens is when you sign that big of a contract, your graph rate goes up. But when you're a larger company, let's say if you're a sales for a workday, you know, one or two clients really don't do it for you. That's really a macro play. And, you know, believe it or not, macro right now, tech's doing very well. But macro for non-AI tech is not good.

12:43We think things are going to be tough for Salesforce and Workday when they report in a few weeks. Because, you know, if you see what's happening with deal activity being pushed up because of the war, because of all the uncertainty around rates, I think, you know, the large software company won't have an easy time to show a rebound in growth rates. So the real kicker has to be that the declining growth rate needs to improve. but it's going to be hard for the larger ones to do it.

13:09Scarlet Fu:Anurag, I want to switch gears and get your take on what's going on with Apple and OpenAI. They have a two-year partnership, but it's starting to become frayed. This is according to our reporting, Mark Gurman of Bloomberg News, reporting on this. The startup, OpenAI, is failing to see the expected benefits from the deal. And, you know, there's now talk of possible legal action here, too. Does this go back to the idea that Apple has had a kind of a tough road here figuring out how to deploy its AI strategy? So I'll take a slightly different angle on this thing. You know, Apple, I think, did a good job at that time to tie up with OpenAI because OpenAI was the best model.

13:47And it did, you know, kind of at that point for a short term change the narrative that Apple's embracing. But frankly speaking, if you look at what OpenAI did, you know, They basically started a new firm where they're going to try to do a device that could compete with Apple someday. They've been poaching engineers from Apple. And frankly, you don't do that to Apple. In fact, Elon Musk also learned it the hard way a long time ago. You have to work closely with Apple. Apple went out and said, you know what? We're going to license Google model for our models. We're going to allow, and Mark's also reported on that same framework, that when they announce their worldwide developers conference on June 8th, they will showcase that consumers can use all the models and not just OpenAI.

14:28So I think there was a little bad blood over there because OpenAI wanted to, you know, compete with Apple. And, you know, Apple controls, I think, are one of the most important distributions for consumers. And I think it's going to be very tough to work with them. Anurag, real quickly, just kind of came across recently. Bill Ackman takes a stake in Microsoft stocks up a couple of percent here today. He says tech deeply embedded into the ecosystem. What do you make of Ackman and Microsoft? Yeah, maybe you read our note from back in January when we said, you know, they are just being punished for no reason.

15:01They are being punished because they're part of the software bucket. But Microsoft is dead smack one of the most important companies as we see AI grows. Stay with us. More from Bloomberg Intelligence coming up after this. Amazon Health AI presents Painful Thoughts I, um, I can't stop scratching my downtown Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown Some things you'd rather type than say out loud There's no question too embarrassing for Amazon Health AI Chat your symptoms and get virtual care 24-7 Healthcare just got less painful.

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17:17Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Taking a look at Boeing right here. Boeing, as you know, the CEO of Boeing, went with President Trump over to China, in large part looking for some business, presumably. And I guess President Trump put out on social media yesterday, Trump said China would buy 200, quote, big aircraft. I don't know. The stock traded off about 4 percent yesterday, off about 3 percent today.

17:51So maybe a little underwhelming. But let's check out what's going on with Boeing and China. A huge market for Boeing, of course. Sid Phillip, deputy team leader for global aviation, joins us here. Sid, were you surprised that the stock has been trading down on news that China is going to be back buying some Boeing planes? So on the face of it, Paul, it looks like a really good deal for Boeing, given the fact that it's a 200 plane order. At the same time, the expectations were much higher for this order from China. And so the expectation was that they would order 500 737 MAX jets as well as a large number of white body jets.

18:29And unfortunately, the details still aren't clear on what the order comprises, what the aircraft types are, what the timing of it. And both Boeing and China have not really talked about what the order entails. And so the market is a little underwhelmed by the order, given the fact that the possibility was much larger. So just give us a little history here about for Boeing. How big is the China market for them? and how has that market evolved over the last year or two? So for Boeing, China is a really important market. China is the world's second largest aviation market. And given the fact that COMAC, which is the Chinese rival to both Airbus and Boeing, isn't really producing airplanes at such a large scale.

19:15So for Boeing, this is an important market and a market that hasn't really seen any order momentum in the last almost a decade since when Trump was last in China. So for Boeing, this was the moment that they would get their next big break from China. Unfortunately, that hasn't happened. I mean, Airbus, in that meantime, has secured over 700 plane orders. And so for Boeing, they're sort of really playing at a much smaller level in terms of the overall market in China. But given, as I understand it, the China aviation market continues to be in serious growth mode, Can Airbus fulfill that growth, support that growth, or does China at some point need Boeing?

19:58China definitely needs Boeing. I mean, the Chinese airlines that are looking to secure their next generation of aircraft or replace older aircraft with more fuel-efficient ones will definitely need to order Boeing planes. And so it is something that the Chinese airlines have expressed a need for, and it is in Boeing's interest to sort of supply those aircraft. So especially at a time when jet fuel prices are rising, like fuel efficient aircraft are really valuable. And so for the 737 MAX, this is an important market both for the Chinese carriers as well as for Boeing. So let's just say it's even at this lower than expected number of 200 aircraft.

20:37That would still be the would that be the first real order from China in almost a decade? It will be. It will be the first major order by China in over in almost a decade. if this order materializes, even if it's just for 200 planes. And then Trump, on his way back, talked about the possibility of up to 750 planes. And so, again, specifics aren't clear, and it's not really clear what the order entails, because Trump said that it depends on whether Boeing is able to fulfill the 200-plane order, and then they would order another up to 650 aircraft. So details are sort of murky at the moment, but it could be a sign that there may be a thought towards ordering those Boeing planes from China.

21:22Before, I mean, I guess without the help of the executive branch, whoever that may be in office, what can Boeing, it looks like Boeing doesn't have much influence or ability to shape the conversation with the Chinese. Because again, as you mentioned, they have gone almost 10 years without a sale. Yes. So China, especially for its state-owned airlines, tends to order planes in bulk. And so whether that's from Airbus, whether that's from Boeing. And so those big orders from the Chinese carriers depend on government to government relations. And Boeing has featured prominently in most of President Donald Trump's negotiations around the world.

22:01I mean, remember in Qatar where there was that massive order, the biggest order by value for Boeing planes. And again, like Boeing planes have featured prominently in trade announcements, trade deals. And for China, getting those Boeing planes is sort of valuable and they need to get it done. So we do expect them to buy it, but timing again remains unclear. Stay with us. More from Bloomberg Intelligence coming up after this. Amazon Health AI presents Painful Thoughts.

22:37Scarlet Fu:Why did I search the internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic sores in various stages of ooze. I can clear my search history. But I can never unsee that. Don't go down the rabbit hole. Amazon Health AI gets you the right care fast. Health care just got less painful. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently.

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