Cerebras pops on first day of trading in biggest year for AI in capital markets yet

Cerebras’ IPO is the latest signal that the world is AI-obsessed. The IPO priced way above its target range of USD 150-160 — itself up from USD 115-125 initially on soaring demand — at USD 185 per share, and jumped 68% on its debut. As the largest IPO this year, raising USD 5.6 bn with an implied valuation of USD 564 bn, it’s a testament to how big of a theme AI has become across capital markets this year.

(Want to know more about Cerebras’ pitch? We dove into that, and how much of it rides on Abu Dhabi’s own AI thesis, in an earlier Planet Finance, here.)

AI stocks have soared this year. Dow Jones’ US semiconductors index, tracking chip heavyweights like Nvidia, Intel, and Qualcomm, is up more than 39% YTD. Over in Asia, South Korea’s tech-heavy Kospi has risen more than 77% this year, while Taiwan’s Taiex has notched fresh records owing to the AI rally.

There’s a contradiction when it comes to how investors view AI, which is likely why there’s also been quite a bit of volatility for AI stocks. As JPMorgan puts it in its latest mid-year outlook (pdf), there’s a discrepancy between private market investors’ demand for equity stakes in AI companies and the public markets’ view on AI firms’ debt rush and concerns that their investments might not pay off.

But JPMorgan thinks AI will be a “driver of durable returns” in the medium term, citing several positive signals for the sector, including the fact that AI will support productivity gains and, in turn, valuations.

More evidence that this will be the year of AI for capital markets: At least one more blockbuster AI IPO is expected, with Elon Musk’s venture SpaceX — which plans to put data centers in space — expected to come to market with what’s looking to be the largest IPO in history. Analysts also assign a 50/50 chance of Anthropic going public this year, and a 1-in-3 chance for an OpenAI IPO.

What to watch: How those major AI firms will trade over time, and whether “public markets validate private market valuations, and even build on them,” JPMorgan says. That “would likely bolster confidence in AI infrastructure spending,” it adds.

THE CLOSING BELL-

The EGX30 fell 0.5% at Thursday’s close on turnover of EGP 12.4 bn (60.3% above the 90-day average). Local investors were the sole net buyers. The index is up 27.1% YTD.

In the green: Qalaa Holdings (+9.9%), Kima (+7.2%), and Raya Holding (+5.3%).

In the red: Palm Hills Developments (-2.8%), TMG Holding (-2.0%), and Valmore Holding -EGP (-1.8%).