Wall Street's Favorite New AI Stock vs. the One They're Ignoring: The Numbers Aren't Even Close

One of Wall Street's favorite artificial intelligence (AI) stocks right now is, no surprise, the semiconductor company Cerebras (NASDAQ: CBRS). It's been a publicly traded company for only about a week, but enthusiasm is high. Investors rushing in to buy the stock have pushed it up by about 60% from its $185 IPO price as of this writing.

But not all AI stocks are feeling the love right now, especially not Microsoft (NASDAQ: MSFT). Despite solid growth in its recently reported fiscal 2026 third quarter and its strong position in AI and cloud computing, Microsoft's stock is down by more than 8% over the past 12 months.

With many investors rushing to buy Cerebras stock and shunning Microsoft, should you follow the crowd? I don't think the masses are getting this one right -- and the financial numbers back me up.

Image source: Getty Images.

Cerebras has quickly caught Wall Street's attention

Cerebras recently burst onto the tech scene and generated a lot of buzz when its shares jumped 68% on May 14 -- its first day of trading.

Most chipmakers begin the manufacturing process by cutting large semiconductor wafers into dozens or hundreds of smaller pieces, which are then used to make individual chips. Cerebras designs and manufactures unusually large semiconductors, using an entire wafer to create a single chip that is about the size of a dinner plate. Acting as one big integrated semiconductor unit, they are, according to the company, far more efficient than hundreds of smaller processors.

For example, the company's main product, the Wafer Scale Engine (WSE-3), has 250 times more on-chip memory and 2,625 times more memory bandwidth than Nvidia's B200 platform, according to a Cerebras SEC filing.

Cerebras hopes to chip away at Nvidia's dominance in AI data center processors by offering a more efficient alternative. But it won't be easy to knock Nvidia off its perch at the top of the AI semiconductor hill, considering that the company had 86% of the AI data center processor market as of the end of 2025.

That said, investors certainly seem optimistic about Cerebras' prospects, and their enthusiasm has been fueled, in part, by some deals it has made. For example, in January, it inked a $10 billion agreement with OpenAI under which it will supply 750 megawatts of AI infrastructure for the ChatGPT creator. Then this month, OpenAI signed another agreement to invest $20 billion into the chipmaker over the course of three years for an 11% equity stake in it.

I'm personally filing Cerebras' tech and long-term AI opportunity under "too early to tell." While its WSE-3 sounds promising, there are still many questions about how quickly the company can grow sales and when it will become consistently profitable.

Microsoft has been ignored lately, but its financial performance far outpaces Cerebras'

The contrast between Cerebras' rapid share price growth and Microsoft's stock declines couldn't be starker. But that doesn't mean investors are seeing things clearly. In fact, I think they should take a closer look at Microsoft's impressive results for its recently reported fiscal third quarter and contrast them with Cerebras' financial results.

Consider that Microsoft's sales rose by 18% year over year to nearly $83 billion, and non-GAAP (adjusted) earnings rose 21% to $4.27 per share. Compare that to Cerebras' annual results: In 2025, its sales were just $500 million, and it posted a non-GAAP loss of almost $76 million.

Microsoft also has $32 billion in cash and cash equivalents on its books, while Cerebras has just $600 million.

Microsoft is benefiting from its early focus on AI and its strong position in cloud computing. The company's early partnership with OpenAI helped it incorporate chatbot features into its productivity software, and its position as the second-largest cloud infrastructure provider has become increasingly beneficial, with Azure sales climbing 40% in fiscal Q3.

Microsoft is also expanding its AI partnerships beyond OpenAI. For example, last year, it began by working with Anthropic to offer access to its Claude model in its Copilot services and Azure cloud.

Cerebras could turn out to be a great long-term investment. But if you're looking for a leading tech company that's already benefiting from AI and will likely do so for years to come, Microsoft is ahead of it by leaps and bounds.

We'll have to wait a while longer to find out whether Cerebras is just a flash in the pan or has something substantial to offer with its unique take on wafer-size semiconductors. But Microsoft is already posting impressive revenue and earnings. In the race between the tech incumbent and upstart Cerebras, it's not even close.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool has a disclosure policy.