<Earnings> Cerebras Raises Full-Year Forecast but Q2 Revenue Disappoints, Shares Plunge 16% After Hours

Artificial intelligence (AI) chipmaker Cerebras Systems (CBRS-US) released its second financial report since its initial public offering (IPO) in May. Although the company raised its full-year financial outlook, its stock plunged 16% after-hours on Wednesday (June 12) as last quarter’s revenue fell short of market expectations.

### Key Financial Figures vs Analyst Expectations

#### Q3 Outlook - Core Revenue: $214–216 million

#### Full-Year Outlook - Core Revenue: $880–890 million (up from prior $855–865 million) - Adjusted Gross Margin: 41–43% (up from 38–41%) vs actual 35.89%

Cerebras stated that its remaining performance obligations (RPO) reached $2.54 billion, which the company described as evidence of "extremely strong future demand."

### Q2 Results (Ended June 30) vs Analyst Expectations - Core Revenue: $180 million vs $194 million expected - Adjusted EPS Loss: $0.05 vs $0.17 expected

Cerebras’ core revenue rose 74.3% year-over-year to $180 million, below analysts’ forecast of $194 million. The company also reported total revenue, including "pass-through revenue," at $210 million.

Following the earnings release, Cerebras’ stock tumbled 16% in after-hours trading. During regular trading on Wednesday, shares rose 11.6% to close at $262.06 per share, marking a 15.5% gain for the week so far.

Cerebras went public on Nasdaq in May, raising $6.4 billion at an IPO price of $185 per share. While the stock has declined from its May peak, Wednesday’s closing price remains 42% above the IPO price.

### Competing in the AI Inference Market

Despite a global AI boom driving hundreds of billions of dollars into chips and infrastructure, Cerebras faces pressure to prove its business can achieve profitable scale.

Cerebras is challenging NVIDIA (NVDA-US), the dominant player in AI chips, particularly in workloads requiring "low latency"—fast response times for interactive applications. The company refers to this segment as "fast inference."

NVIDIA has recently intensified its push into the rapidly growing AI inference market by licensing technology from startup Groq. As such, any sign of slowing customer adoption or conservative guidance from Cerebras could deepen market skepticism about its ability to capture market share from the industry leader.

Andrew Feldman, CEO of Cerebras, said AI demand is "very strong," with enterprises willing to pay premium prices for dedicated inference chips.

Addressing investor concerns over profitability, Cerebras projected core gross margins to expand to 38–40% this quarter. "Gross margins are currently healthy and still improving, because fast inference services can be priced at a premium," Feldman said. He added that Cerebras has successfully increased the AI output capacity of its systems.

The company also emphasized that it is not facing supply shortages as severe as other chip designers.

### Wafer-Scale Engine Advantage

Cerebras’ flagship product, the Wafer-Scale Engine (WSE), is a single chip the size of a dinner plate, containing trillions of transistors. The company claims this architecture is more efficient than NVIDIA’s approach of connecting thousands of smaller GPUs.

### On-Chip Memory as a Competitive Edge

Feldman noted that integrating memory directly onto the chip reduces exposure to surging high-bandwidth memory (HBM) prices, giving Cerebras a competitive advantage over NVIDIA.

"Due to rising HBM costs, NVIDIA’s pricing has significantly increased. This is a battleground. If they can’t deliver, or component prices spike, it naturally benefits us," he said.

Advanced AI chip manufacturing is highly concentrated at TSMC (TSM-US) (2330-TW). TSMC is currently facing tight capacity in advanced-node wafer production. However, Feldman stated that since Cerebras uses TSMC’s 5-nanometer process—not 2nm or 3nm—the pressure to secure capacity is relatively lower.

Cerebras is now accelerating chip shipments to fulfill its multi-year, $2 billion AI computing contract with OpenAI. This deal is widely seen as critical to validating Cerebras’ valuation in the eyes of the market.