Cerebras stock plummets after mixed quarterly results tests AI narrative

AI firm Cerebras Systems saw its stock fall as much as 17% in after-hours trading on Wednesday even with the chipmaker beating Wall Street’s expectations on most metrics and raising its full-year revenue forecast.

The reaction is important for investors in the AI infrastructure industry, as it helps in assessing if top AI infrastructure names can keep justifying steep valuations.

Cerebras (NASDAQ: CBRS) posted core revenue of $210 million for Q2, more than double the figure from the same quarter a year ago and ahead of the $191 million analysts had expected, according to CNBC figures cited by Quartz.

The company lost 5 cents a share on an adjusted basis, way smaller than the expected loss of 17 cents a share. Its adjusted operating loss of $34 million was also well under the $63 million estimate Barron’s penciled in.

GAAP total revenue hit $180.1 million, a 74% increase from one year ago.

Cerebras’ wafer engine sees stumble

Cerebras is known for its Wafer-Scale Engine, a design that keeps an entire 300-millimeter silicon wafer intact as one enormous processor built for AI and scientific workloads. The hardware earned the company its “Nvidia rival” label, however, in the second quarter, it took a beating.

Physical hardware revenue fell 23% year-over-year to $54.1 million, Yahoo Finance and Binance News both reported.

CEO Andrew Feldman stated that this was due to the timing of deliveries and not weak demand. “Hardware is going to be lumpy,” he said, explaining that the company sometimes cannot book sales because customers do not possess the data-center space to install machines the size of Cerebras’.

Cloud is the new engine

GAAP cloud and other services revenue reached $126 million, up 281% from a year earlier, while core cloud revenue climbed 287% to $127.7 million, according to Quartz. This means the company that markets itself as a chip challenger to Nvidia now draws its largest revenue stream from renting out compute, instead of selling hardware.

Cerebras also swung to a GAAP net loss of $450.5 million, or about $2.89 per share, reversing a $309.5 million profit a year earlier. The company pinned the reversal on $386.6 million in stock-based compensation, an expense tied to its May IPO.

Core gross margin was up almost 940 basis points from the second quarter of 2025 at 41%, attributed to the premium pricing on fast inference.

Guidance points offer upside

Management used the report to lift expectations, as Cerebras raised full-year 2026 core revenue guidance to a band of $880 million to $890 million, up from $855 million to $865 million. This was also above the $867.6 million analysts expected.

For the third quarter it guided to core revenue of $214 million to $216 million, ahead of a consensus close to $212 million per Koyfin, with gross margin projected at 38% to 40%.

CFO Bob Komin said the company intends to more than triple revenue in 2027 as production scales and component costs come down. CEO Feldman said in a statement that “Speed changes what AI can do,” adding that it “opens entirely new markets.” He also described gross margins as “in a good spot, and growing, because fast inference is priced at a premium.”

Cerebras balance sheet post-IPO

The May IPO left Cerebras well funded, with the company raising $6.4 billion in gross proceeds. The AI firm also ended June with $8.6 billion in cash, cash equivalents, restricted cash and short-term investments, in addition to $25.4 billion in remaining performance obligations.

Shares ended Wednesday’s regular session at a price of $262.06, which was about 42% above the $185 IPO price, just before the after-hours dip erased a portion of that gain.

The company is also building relationships to widen its reach, including a partnership with AMD and an arrangement to allow OpenAI run models such as GPT 5.6-Sol on its systems.

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