Cerebras sinks 14% as full-year margin forecast disappoints
The Cerebras logo in this illustration taken June 11, 2026. REUTERS/Dado Ruvic/Illustration
June 24 : Cerebras shares tumbled about 14 per cent on Wednesday after the chip designer warned that annual profit margins would undershoot first-quarter figures in its debut earnings following a blockbuster initial public offering.
The stock hit $195.75, its lowest level since publicly listing on the Nasdaq last month, and was on track to wipe out more than $6 billion in market value.
Cerebras forecast adjusted gross margins of 38 per cent to 41 per cent for 2026, compared with the 47 per cent it reported for the first quarter.
The projection is far below those of rivals such as Nvidia's mid-70 per cent range and Advanced Micro Devices' mid-50 per cent, even as it came above analysts' estimates of 29.58 per cent.
The California-based company has struck a $20 billion multi-year deal with OpenAI. CEO Andrew Feldman said in a post-earnings call that OpenAI's GPT 5.4 is running on Cerebras chips. The ChatGPT maker is set to deploy 750 megawatts of the company's semiconductors as part of the deal.
Feldman also said Amazon Web Services would soon start using the company's chips in its data centers, with revenue flows expected in the next year.
"Key engagements with OpenAI and AWS are moving forward which is more important to the long-term story," a group of analysts led by Joshua Buchalter at TD Cowen said.
"Gross margins will be pressured as Cerebras aggressively ramps, but we remain upbeat on Cerebras' prospects as it scales to support a meaningful revenue inflection."
Analysts have flagged that gross margins could be pressured by the company manufacturing relatively larger-sized chips, and as it rents back its own systems from an existing client to meet short-term demand while it builds out more data center capacity.
Cerebras' shares are down more than 37 per cent from its market debut as enthusiasm around artificial intelligence stocks cools and investors fret over the massive spending to build the infrastructure for the new technology.
Still, brokerage Wedbush raised its price target on the stock to $280 from $270, while Morgan Stanley expects the stock to now hit $273 in the next 12 months, from $250 earlier.
"While the need to build out cloud capacity has some risks, we see evidence in these numbers that the company has been conservative in projecting the ramp," said Morgan Stanley's Joseph Moore.
"With demand exceeding supply, and no major supply bottlenecks, we see room for material upside."
