Cerebras Systems, which went public in May, initially saw its shares soar from an IPO price of $185 to a peak of $386, but have since fallen approximately 72%. Paul Meeks, a contrarian investor, now views this decline as an opportunity, citing the company's Wafer-Scale Engine chip design as a competitive advantage in AI computing, particularly for AI inference.
He notes that Cerebras has a substantial backlog of contracts, including about $20 billion tied to OpenAI, despite recent speculation about OpenAI using Nvidia chips for a new AI model. Meeks believes these concerns are overstated and maintains confidence in the long-term value of the relationship with OpenAI.
He projects that Cerebras could see its revenue grow from approximately $210 million to $2.8 billion by 2027, with shares currently trading around $107 and a price target of $209, indicating a potential upside of about 91%.
While acknowledging risks related to execution and competition from Nvidia, Meeks argues that the market is overly focused on short-term uncertainties rather than the company's long-term potential