AMID ALL THE AI HYPE, THESE IPOS COULD BE POISED FOR LONG-TERM SUCCESS

THE AI SECTOR went on a massive tear last year, and there are few signs the pace will slow anytime soon. For investors, this presents a dilemma. While plenty of public companies offer exposure to AI—from chip giant Nvidia to the utilities that power massive sets of data—their sky-high share prices pose a risk of buying at the top.

- GREG MCKENNA AND LEO SCHWARTZ

But what about AI firms that have yet to go public? That's where all the action seems to be, as companies like OpenAI attract the world's top venture capital firms with record-breaking funding rounds—a process that mostly excludes everyday investors.

Venture capitalists may have the inside track when it comes to the likes of OpenAI, but the coming months are still poised to offer other intriguing new AI investments. Not only are more AI startups ready for the big time, but after a spell when uncertain economic conditions forced firms to stay private, a new era of public offerings is underway. Dzung Nguyen, a Wells Fargo banker, says she expects the tide to shift in the coming months, even if we don't see the frenzied action of 2021 when a rash of firms went public, often at implausible valuations.

WHO COULD GO PUBLIC?

Stock pickers can expect a handful of late-stage AI companies to test the IPO waters this year, with some already close to listing. Those include Cerebras, a California-based chipmaker competing against mighty Nvidia. Even though Cerebras is dwarfed by Jensen Huang's chip behemoth, it has a huge opportunity for growth as firms of all sorts scramble for hardware to power their AI ambitions. But its expansion plans face an impediment: a national security review related to a proposed United Arab Emirates-backed investment. Cerebras declined to comment, but investors have expressed measured confidence it will go through.

Another AI native gearing up for an IPO is CoreWeave, a cloud-computing company, which is reportedly targeting a $35 billion public offering in 2025. Joe Endoso, president of investment platform Linqto, says that CoreWeave's data center services are necessary for companies building bespoke AI applications. “It’s the difference between buying a sports car and an everyday sedan,” he says.