Most important take away

The hosts uniformly recommend not buying hyped AI-adjacent IPOs on day one. With Cerebras pricing at ~$50B (a ~6x markup from its September Series G) and demand 20x oversubscribed, the consensus is to wait for the hype to settle, watch execution on the new OpenAI/AWS contracts, and ideally buy a starter position with fresh capital rather than trimming winners — both because of taxes and because recent AI IPOs (Figma, Klarna, StubHub) have generally underperformed once the hype faded.

Summary

Stocks and investments mentioned

Monday.com (MNDY) — covered after a Q4 earnings beat that sent shares up ~25% pre-market (though paring gains as recording continued). Stock is still down ~50% YTD and ~70% over the past year.

Key numbers:

• Revenue $351M, +24% YoY (beat expectations)
• Adjusted EPS $1.15 (vs. 93¢ guided)
• Raised 2026 guidance to ~$1.5B in revenue
• Net dollar retention 110%
• RPO (remaining performance obligations) up 33% YoY — future booked work growing faster than current revenue
• $100K+ ARR customers up 39% YoY
• AI drove 10% of new ARR
• New “seats + credits” pricing model just announced
• Operating margin doubled from 3% → 6% YoY
• Headcount expected to stay stable next year

Actionable take: Matt is not a buyer but it’s on his radar (large buybacks, narrative reframed from “AI victim” to “AI tailwind”). Rachel notes stock-based compensation and lack of GAAP profitability keep pressure on the shares. Top-line growth is still decelerating (25% → 24% → 18–19% guided), so the core “approaching ceiling” thesis remains intact. Recommendation: watch but don’t chase.

Cerebras (upcoming IPO, possibly this week) — wafer-scale AI chip company positioning as an Nvidia alternative.

Key facts:

• Raising ~$5B at a ~$50B valuation
• IPO range raised to $150–$160/share
• Demand 20x oversubscribed
• Valuation up ~6x from September’s $8B Series G
• Revenue grew 76% YoY in 2025
• 47% GAAP net margin last year
• Valuation: ~100x sales
• CS3 inference reportedly 21x faster than Nvidia’s flagship GPU at 32% lower total cost
• Recent deals: AWS binding term sheet (March), OpenAI deal
• Customer concentration risk: 86% of 2025 revenue from two UAE-affiliated entities (G42 and Mohamed bin Zayed University of AI)

Bull case: unique wafer-scale architecture, well positioned for the inference/agentic AI wave (where Nvidia’s training advantage matters less), big-name customer wins are diversifying the base.

Bear case: extreme customer concentration, ~100x sales valuation prices in perfect execution, Nvidia’s effectively unlimited R&D budget can erode the moat, no GAAP profitability, generally turbulent track record of recent AI IPOs.

Actionable recommendation from both hosts: do not buy at IPO. Matt: “I’ll almost never buy an IPO stock on day one… I don’t see myself buying Cerebras on days two, three or four either.” What would change their minds — a more reasonable valuation, demonstrated revenue diversification away from G42/MBZUAI, and continued growth as the AWS and OpenAI contracts convert from backlog to recognized revenue.

Other IPOs referenced as cautionary examples: Figma, Klarna (Carna in transcript), StubHub — all hyped, all “turbulent at best,” with most underperforming. Pattern: better to wait for hype to subside before initiating.

Companies the listener question mentioned: Anthropic, OpenAI, SpaceX (pre-IPO, owned via secondaries/funds).

Actionable insights on IPO strategy (from listener question)

1. Don’t trim winners to fund speculative IPOs. Tax bill on a 10-bagger can be brutal. “Water the flowers, pull the weeds” (Buffett/Lynch).
2. Use fresh capital, not rotation. Both hosts prefer deploying new cash for new positions rather than selling existing ones.
3. Start small, scale in. Matt’s approach: tiny initial position post-IPO, then build incrementally as the hype settles and the market figures out fair value.
4. Beware of “diversifying your AI trade.” Selling one AI bet to buy another AI bet is not diversification.
5. Watch for liquidity-vacuum effects. Mega-IPOs (OpenAI, SpaceX when they come) can cause institutional rotation out of smaller AI/software names to make room — temporary selling pressure that doesn’t change long-term fundamentals of quality businesses you already own.
6. Look for: contract execution, profitability, customer diversification, valuation moderation. Specifically for Cerebras — backlog converting to recognized revenue and concentration dropping below 86%.

Chapter Summaries

• Monday.com Earnings Reaction. Strong beat, raised guidance, RPO and enterprise growth solid, AI now driving 10% of new ARR. But growth still decelerating and GAAP losses persist. Narrative shifted from “AI victim” to “potential AI beneficiary” — hosts encouraged but not buying.
• Cerebras IPO Preview. Wafer-scale chips, OpenAI and AWS deals, 76% revenue growth, but 86% UAE customer concentration and ~100x sales valuation. Hosts will watch from afar.
• Listener Mailbag — Trimming vs. Fresh Capital for IPOs. Use fresh money, start small, wait out hype, mind taxes, and remember mega-IPOs can rotate capital out of smaller related names temporarily.