Despite raising its full-year outlook, Cerebras Systems saw its stock plunge after hardware revenue fell 23% in Q2.
- Hardware sales slipped to $54.1 million due to “lumpy” customer demand and data center space constraints, but revenue in the cloud business skyrocketed to $126 million.
- The chipmaker posted a net loss of $450.5 million, driven by $386.6 million in stock-based compensation costs, while total sales rose 74% year-over-year to $180.1 million.
- Cerebras increased its full-year core revenue projections to between $880 million and $890 million, and expects revenue to more than triple in 2027.
Cerebras Systems Inc. (CBRS) stock tanked 15% after-hours on Wednesday after the company delivered a mixed second-quarter financial report that highlighted growing pain in its physical hardware segment despite a surge in cloud services demand.
Cerebras, often touted as a rival to Nvidia (NVDA), is known for its Wafer-Scale Engine (WSE) technology which keeps an entire 300 mm silicon wafer intact as a single massive processor, delivering higher computing performance and memory bandwidth specifically suited for artificial intelligence and scientific computing.
Hardware Pullback Offsets Cloud Momentum
Cerebras revealed an unexpected 23% drop in physical hardware revenues, which slid to $54.1 million from the same period a year ago. Chief Executive Officer Andrew Feldman characterized the decline as a side effect of uneven order delivery schedules.
“Hardware is going to be lumpy,” Feldman noted, adding that delays in recognizing sales often stem from clients lacking sufficient data center space to house the company’s massive wafer-scale processors.
Conversely, the firm’s cloud unit, which leases out computing power via specialized data centers, saw revenue jump nearly fourfold to $126 million, bolstered by a broader market shortage in AI compute capacity.
For the quarter ended in June, Cerebras registered total revenue of $180.1 million, a 74% increase from a year prior. The business swung to a net loss of $450.5 million, or $2.89 per share, largely weighed down by $386.6 million in stock-based compensation expenses.
Navigating The Competitive AI Landscape
Cerebras is attempting to carve out market share against dominant industry players such as Nvidia. Recent efforts to bolster its footprint include a partnership with Advanced Micro Devices Inc.(AMD) and integration agreements allowing OpenAI to run models like GPT 5.6-Sol on its architecture.
Feldman indicated that customer demand for low-latency inference processors remains robust, enabling premium pricing that will help push future margins higher.
CBRS Sees Revenue To Triple By 2027
For the third quarter, the company expects core revenue to land between $214 million and $216 million, outpacing the analyst consensus of roughly $212 million, as per Koyfin. Gross margins are projected to expand to a range of 38% to 40% for the period, up from the average forecast of 36%, driven by premium pricing for its fast inference technology.
For the full year 2026, Cerebras upgraded its total revenue guidance to between $880 million and $890 million. This improves upon its prior forecast of $855 million to $865 million and tops analyst expectations of $867.6 million.
Cerebras plans to more than triple its overall revenue in fiscal year 2027 as production scales and component costs decrease.
CBRS Stock: Retail View
Retail sentiment on Stocktwits was ‘extremely bullish’ with ‘high’ message volumes.
However, some users saw a disconnect between market cap and earnings.
View this Stocktwits post
CBRS stock has gained nearly 42% year-to-date.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<