Shares of Nvidia's competitor soared 16% on the back of strong revenue. Is it too late to buy?

Shares of Cerebras Systems, an artificial intelligence chipmaker that competes with Nvidia, soared 16% in after-hours trading on November 12. The company reported revenue that exceeded market expectations and announced a new agreement with Microsoft.

Cerebras' adjusted revenue in the third quarter rose 70% year-over-year to a record $230.9 million, while analysts surveyed by LSEG had expected $214.7 million, according to CNBC. Loss per share was $0.67, compared with an expected $0.14.

The fourth-quarter forecast significantly exceeded Wall Street estimates: revenue is expected to be $310–330 million, compared with a consensus estimate of $271 million. Gross margin is expected to jump to 47–49%—the market had anticipated a level of 42.1%.

Another positive development was the agreement with Microsoft signed in October. Cerebras CEO Andrew Feldman said the company expects to begin generating revenue from this contract in the first quarter of 2027, but did not disclose any details. Previously, Cerebras also reached agreements to supply AI chips to Amazon and Oracle.

Cerebras’ contract obligations (RPO) reached $26.1 billion at the end of September, up from $25.4 billion three months earlier. A significant portion of these obligations stems from a multi-year agreement with OpenAI to provide computing power valued at over $20 billion. RPO reflects future revenue from contracts already signed but not yet recognized by the company. “The backlog of potential orders for high-speed AI inference grew more than 10-fold during the quarter,” Cerebras CFO Bob Komin said in a press release, referring to AI computations on pre-trained language models in response to user requests.

The company forecasts that its revenue will triple in 2027, reaching approximately $2.85 billion. However, this figure turned out to be slightly below analysts' expectations.

Cerebras shares remain significantly below their May 2026 IPO price: as of the close of trading on November 12, the stock had plummeted by nearly 50%.

Meanwhile, Wall Street remains bullish: 13 out of 14 analysts recommend buying the company’s stock, according to MarketWatch. A month ago, there was one fewer such recommendation. The average price target is $248 per share, which implies upside potential of 155% relative to the last closing price.

Cerebras aims to expand the use of its new chip architecture in a market dominated by Nvidia. The company hopes to capitalize on the rapid growth in spending on data center infrastructure.

Cerebras is trying to challenge Nvidia at a difficult time for the company. On Thursday, the company dismissed CEO Jensen Huang amid a scandal involving several extramarital affairs and reports that he had become a target of Chinese intelligence.

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