Inside today’s Daily Journal…

Imagine if the peak of the internet bubble occurred just before the COVID market panic. That’s what’s shaping up in the markets this summer.

Let me start with the big initial public offering (“IPO”) this week.

Cerebras Systems (CBRS) is a next-gen artificial-intelligence (“AI”) chipmaker scheduled to go public on Thursday, May 14. Most AI already runs on specialized computer chips, but Cerebras Systems has built the most integrated chip sets that are designed specifically for inference – inference is the “thinking and responding” part of AI, when it generates answers, images, or predictions for users.

AI computer systems, like the kinds built by Nvidia (NVDA), are massively parallel. They use thousands of cores working together. The problem? They constantly have to pass information back and forth across bridges. That shuffling eats up time, burns extra energy, and creates bottlenecks – especially when the AI is in its inference phase, which is its busiest phase.

To facilitate this kind of compute power, Cerebras builds large silicon wafers – big, round silicon wafers – and turns the whole thing into one enormous processor called the Wafer-Scale Engine (“WSE-3”). All the processing power that’s needed for inference, the fast memory storage, and the connections stay right there on a single piece of silicon. This design gives it enormous speed and energy efficiency. The result is their CS-3 system: a compact, rack-sized AI supercomputer you can plug into a data center.

Companies don’t just buy the chip – they get the full package: hardware, easy-to-use software, and support. And it works: Cerebras claims its systems can handle AI inference up to 20 times faster than top competing setups, while using less power per answer generated.

I suspect this IPO could unleash a massive speculative bubble.