Shares of artificial intelligence chip designer Cerebras Systems fell sharply in extended trading after the company reported second-quarter revenue that missed Wall Street expectations, according to Reuters. The post-market decline highlighted investor scrutiny over richly valued artificial intelligence stocks and whether emerging firms can scale profitably.
Second-Quarter Revenue Miss Triggers Stock Sell-Off
Total sales for the quarter ended June 30 reached $180 million, according to data from CNBC, while analysts surveyed by LSEG had expected $194.23 million. The company also reported core revenue of $210 million, which includes pass-through revenue. Despite the revenue miss, Cerebras posted an adjusted loss of 5 cents per share, outperforming the Wall Street consensus forecast of an adjusted loss of 17 cents per share, as reported by siliconangle.com.
Raised Guidance and Strong AI Demand
Alongside its second-quarter results, Cerebras raised its full-year guidance, projecting adjusted revenue for 2026 to be between $880 million and $890 million, up from its earlier forecast of $855 million to $865 million. For the current quarter, the company anticipates core revenue between $214 million and $216 million.
Chief Executive Andrew Feldman said during a conference call that artificial intelligence demand is going through the roof
and that companies are willing to pay premium prices for specialized inference chips. Cerebras focuses on challenging market leader Nvidia in tasks requiring low latency and quick real-time responses, a capability the company terms fast inference.
Furthermore, finance chief Bob Komin stated that Cerebras plans to more than triple its revenue in 2027.
Financial Performance and Gross Margins
Cerebras recorded a net loss of $450.5 million for the quarter, compared to a profit of $309.5 million in the same period a year earlier. The company attributed the majority of this net loss to $386.6 million in stock-compensation costs. On an adjusted basis, the net loss narrowed to $6.91 million from $40.5 million a year prior.
Adjusted gross margin for the second quarter stood at 40.6%, down from 46.5% in the preceding three months. Bob Komin explained that the five-percentage-point decrease stemmed from higher costs incurred to rent computing capacity previously deployed at other customers. Nevertheless, Cerebras raised its annual adjusted gross margin projection to a range of 41% to 43%, up from 38% to 41% previously, and expects core gross margin to expand to between 38% and 40% in the current quarter.
Market Position and Public Offering Context
Cerebras went public on the Nasdaq in May, pricing its initial public offering at $185 per share and raising $6.4 billion. The stock subsequently peaked at over $309 at the end of May before fluctuating and closing at $262.06 prior to the earnings release. The company’s order backlog, or remaining performance obligations, remained steady at approximately $25 billion, a figure executives pointed to as evidence of extraordinary future demand.
The chipmaker manufactures its processors using a dinner-plate-sized Wafer-Scale-Engine that integrates compute cores and memory on a single silicon slab utilizing TSMC’s 5-nanometer manufacturing process. Its current customer base includes major agreements such as a multiyear contract with OpenAI to provide AI compute, alongside recent partnerships with Advanced Micro Devices.
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