Cerebras Analyst Defies Market Skepticism, Sees No Threat from Nvidia

Cerebras Systems Inc (NASDAQ:CBRS) stock has been under pressure after OpenAI's announcement that it would be using Nvidia Corp’s (NASDAQ:NVDA) GPUs for its new 'GPT-1 Sol Ultrafast' model.

However, analyst Paul Meeks is bullish on the company and believes the competition from Nvidia is 'exaggerated'. He upgraded his rating from Hold to Buy with a price target of $209.

Meeks notes that Cerebras Systems has strong partnerships with Advanced Micro Devices Inc (NASDAQ:AMD) and Amazon.com Inc’s (NASDAQ:AMZN) AWS business, which gives the company an advantage in the AI hardware market.

The analyst also points out that while Nvidia chips may handle the setup phase of AI inference, Cerebras Systems chips are still needed for the response phase, or 'decode'. This means that even with OpenAI's announcement, Cerebras Systems could still do 'plenty of business' with the company.

The main risk for investors is not competition from Nvidia, but rather timely power capacity additions and the execution risk associated with these additions. Meeks advises investors to wait until most of this execution risk has been squeezed out before investing in the stock.