In this article, we will look at Jim Cramer’s 5 Stock Calls Including Cerebras and Cisco, and Caution About Overhyped AI Stocks. Please visit Jim Cramer’s 11 Stock Calls Including Marvell and Trane, and Caution About Overhyped AI Stocks, if you’d like to see the extended list and methodology behind it.
5. Cerebras Systems Inc. (NASDAQ:CBRS)
Cerebras Systems Inc. (NASDAQ:CBRS) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Cramer discussed the company’s IPO during the episode, as he stated:
Today, as I said at the top of the show, we got the largest IPO of the year, or at least so far, when Cerebras Systems came public with a bang… It is a great company, but man, after this red-hot start for the stock, it’s very hard for me to get comfortable with this valuation at $185, the offer price. Cerebras had a fully diluted valuation of roughly $56.6 billion, where it was trading about 111 times last year’s sales, not earnings, sales, okay, that’s important. Keep that in mind. Up here at $311, it’s more like 187 times last year’s sales… Of course, Cerebras is getting that valuation because it’s growing like a weed.
But you know what? These guys had 76% sales growth last year… That is not that much different from NVIDIA, which was at 65. So really, if you buy the stock up here, you’re betting on the idea that Cerebras will have much better growth in the many years in the future. 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. I don’t like it. Not their fault… Really, I think that what’s happening here is that Cerebras has a sexy story and a perfectly timed IPO…
The bottom line: While there might be a situation in the future where I can recommend Cerebras, I just can’t even get close to justifying the valuation up here, given how much it’s already run right out of the gate… For now, I say keep your bat on the shoulder and hope this stock gives you a giant pullback because at these levels, no, it’s too rich for me. You’ll have to buy it up here without my blessing. I can’t go back to 1999. You shouldn’t either.
Cerebras Systems Inc. (NASDAQ:CBRS) designs and manufactures an artificial intelligence compute platform featuring a specialized wafer-scale engine designed for high-performance generative AI and inference tasks. The company provides its proprietary systems and software to several clients, including hyperscalers, foundation model labs, and sovereign AI initiatives.
