Cerebras Stock Surges in 2025’s Biggest IPO – Jim Cramer Advises Caution on Valuation

Cerebras is the hot new AI chipmaker. Here’s Jim Cramer’s advice on the stock.

CNBC’s Jim Cramer warned investors agAInst chasing shares of Cerebras Systems following its explosive market debut on Thursday.

“While there might be a situation in the future where I can recommend Cerebras, I just can’t even come close to justifying the Valuation up here given how much it’s already run right out of the gate,” the “Mad Money” host said. “For now, I say keep your bat on your shoulder and hope the stock gives you a giant pullback. Because at these levels, it’s too rich for me.”

Cerebras debuted Thursday in the year’s largest IPO. The AI Chipmaker priced its shares at $185onWednesday\text{—}aboveitsalreadyraisedrangeof$150 to $160\text{—}beforeopeningat$350 on Thursday. Shares ended the day at $311,givingthecompanyamarketcapitalizationofapproximately$95 billion. At its intraday peak, the stock touched $386.

According to Cramer, the excitement is not entirely unfounded. Founded in 2015, Cerebras has built what it calls “the largest commercial chip in the history of the computer industry.” The processor is made from an entire Silicon wafer and is specifically designed for Artificial Intelligence workloads. In its IPO prospectus, Cerebras said its processors can be “up to 15 times faster than leading GPU-based solutions” for certain workloads and “more than 10 times faster” in some AI training APPlications.

Cramer also highlighted several high-profile partnerships that could help drive future growth. Earlier this year, the company announced a $20 billion multiyear agreement with OpenAI to provide 750 megawatts of computing capacity. Meanwhile, Amazon Web Services recently agreed to deploy Cerebras chips alongside its own Trainium processors. Both Amazon and openai hold warrants to purchase Cerebras stock.

Revenue growth has also been strong, Cramer noted. Cerebras generated $510 million in revenue last year, up 76% year-over-year, after sales more than tripled in both 2023 and 2024. And while Cerebras remains unprofitable, Cramer said he is not overly concerned because the company is growing quickly and has no debt.

However, Cramer cautioned that investors should not overlook the risks — most notably, valuation. Following Thursday’s rally, the stock’s valuation looks increasingly stretched. At Thursday’s closing price, Cerebras traded at roughly 187 times last year’s sales, compared with about 26 times sales for NVIDIA, 21 times for AMD, and 33 times for Broadcom.

“So, really, if you buy this stock up here, you’re betting on the idea that Cerebras will have much better growth for many years in the future,” Cramer said. “Honestly, at this valuation, you’re basically expecting revenue to be several multiples of what it is right now in a fairly short period of time. Maybe that’s possible, given the company’s impressive Technology, but that seems like a real leap of faith to me.”