Cerebras shares plummeted 15% due to weak sales of AI chips

Chipmaker Cerebras Systems, unlike its competitors AMD and Intel, unexpectedly reported a decline in revenue from hardware shipments—a sign that the recently publicly traded company is still making slow progress in selling computers based on its new chip architecture, Bloomberg notes. At the same time, Cerebras reported that revenue from its cloud division had nearly quadrupled and raised its full-year sales forecast. The company’s stock plummeted by more than 15% in after-hours trading.

Revenue from equipment sales at Cerebras Systems fell 23% year-over-year in the second quarter to $54.1 million, the company reported on August 12. This is its second earnings report since its IPO.

A positive highlight in the financial results was the revenue growth of the cloud division, which provides AI computing power based on Cerebras technology: revenue nearly quadrupled to $126 million.

The company's total revenue increased by 74.3% year-over-year to $180.1 million. However, Cerebras shifted from a net profit of $309.5 million a year earlier to a net loss of $450.5 million, or $2.98 per share.

The chip manufacturer has $25.4 billion in outstanding obligations. The company cited this figure as evidence of “exceptionally high future demand.”

Cerebras expects its total revenue for the current quarter to exceed Wall Street’s forecasts. The company estimates that third-quarter sales will total about $215 million, compared with analysts’ average forecast of $212 million, according to Bloomberg. Gross margin—the portion of revenue remaining after deducting cost of goods sold—is expected to be 38–40%, compared with Wall Street’s average forecast of 36%, the agency notes. For the full year, Cerebras expects revenue in the range of $880 million to $890 million. In May, the company had forecast $855–865 million. Analysts had expected an average of $867.6 million. The company also stated that it plans to triple its revenue by 2027.

After the earnings report was released, Cerebras shares plummeted 15% in after-hours trading, to $222.5. Prior to the earnings report, the stock had risen nearly 12% during regular trading hours, to $262.1.

The report painted a mixed picture for investors, according to Bloomberg. Following its IPO in May, Cerebras’s stock rose 42%. The company positions itself as a competitor to Nvidia in the AI chip market, but cloud computing has become its largest source of revenue. “Revenue from hardware will be uneven” because the timing of order fulfillment and revenue recognition can vary significantly, Bloomberg quotes Cerebras CEO Andrew Feldman as saying. According to him, in some cases, customers simply do not yet have the necessary space in their data centers to accommodate new computing systems.

Meanwhile, other chipmakers reported strong sales growth in the last quarter: AMD’s revenue increased by 50%, and Intel’s by 25%. Cerebras is at a relatively early stage of acquiring customers and promoting its technology, so its hardware revenue is less predictable, Bloomberg explained.

The company’s main competitive advantage is its new approach to building high-performance processors. Cerebras manufactures a single giant chip from an entire silicon wafer, which is typically used to produce many separate components. Cerebras has built its own network of data centers that provide computing power as a service, in part to demonstrate the viability of its technology. The company is now benefiting from the shortage of data center capacity, particularly the infrastructure required for artificial intelligence tasks.

Cerebras remains committed to developing both areas—hardware sales and data center services—Feldman emphasized.

This article was AI-translated and verified by a human editor