Cerebras (CBRS) Stock Tumbles 17% Despite Strong Q2 Earnings Beat

Key Takeaways

• Cerebras delivered Q2 core revenue of $210 million, surpassing analyst expectations of $191 million and representing a 100% year-over-year increase.
• Shares plummeted 17% in after-hours trading following a 12% gain during the regular session.
• The company’s adjusted operating loss totaled $34 million, significantly better than the anticipated $63 million loss.
• Full-year 2026 core revenue guidance was increased to $890 million, with gross margin projections raised to 41%-43%.
• The company’s order backlog remained unchanged at approximately $25 billion, largely supported by a substantial multi-year agreement with OpenAI for cloud-based server rentals.

Despite delivering Q2 financial results that exceeded Wall Street’s projections on Wednesday, Cerebras Systems watched its stock price tumble in extended trading. Shares declined approximately 17% to roughly $219 after hours, erasing gains from a 12% rally during the regular trading session.

Cerebras Systems Inc., CBRS

The company’s core revenue for the second quarter reached $210 million, exceeding analyst consensus estimates of $191 million and representing a doubling from the prior-year period.

Cerebras employs a unique revenue measurement approach. The company excludes pass-through revenue that generates zero margin while incorporating warrant amortization expenses. For Q2, traditional reported revenue stood at $180.1 million, which adjusted to $210 million using the core revenue methodology.

The company’s full-year adjusted operating margin forecast now stands at approximately -18%, representing a significant upgrade from the -30% projection issued in June.

This represents meaningful operational progress. During the Q1 earnings release in June, management had guided to an adjusted operating margin of -30%. The revised guidance of around -18% demonstrates accelerated improvement in the company’s path to profitability.

Third-quarter guidance similarly exceeded analyst projections. Wall Street currently anticipates Cerebras will achieve adjusted operating profitability by 2027, and the current trajectory suggests this milestone could arrive on target or potentially ahead of schedule.

However, bottom-line performance raised red flags. Cerebras recorded a net loss of $450.5 million in Q2, a dramatic reversal from net income of $309.5 million during the same quarter last year.

The company’s order backlog held steady at approximately $25 billion. In high-growth technology companies, investors typically expect this metric to expand quarter over quarter.

OpenAI Partnership Represents Majority of Backlog

A significant portion of the $25 billion backlog stems from a long-term agreement with OpenAI for cloud-based access to Cerebras computing infrastructure. The arrangement includes expansion options for OpenAI and equity warrants as part of the compensation structure.

The company has secured additional partnerships with Amazon and AMD. Under these agreements, Cerebras’ WSE processors function in tandem with Amazon and AMD silicon for accelerated inference workloads. Amazon is also receiving equity warrants as part of its deal.

Shares Have Experienced Wild Swings Since Market Debut

Cerebras made its public market debut in May with an initial offering price of $185 per share. The stock surged to $350 on opening day and peaked at $386 before retreating to a low of $161 by late June.

Following that volatility, shares have traded in a range between $162 and $266. The stock has experienced daily price movements exceeding 3% in either direction on 43 out of the 62 trading days since its IPO.

The company currently carries a market capitalization of approximately $59.37 billion.

Management increased its full-year core revenue projection from $880 million to $890 million and elevated gross margin expectations to a band of 41% to 43%.

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