Cerebras Stock Plunges After First Post-IPO Earnings on Core Margin Outlook
June 25, 2026
Shares of Cerebras Systems tumbled after the AI chipmaker reported its first earnings as a public company. Even though revenue and its sales outlook beat expectations, the stock fell nearly 20% on June 24, as the outlook for its core (non-GAAP) gross margin drew investor concern.
CEO Andrew Feldman says investors misunderstood the guidance.
Why a Revenue Beat Couldn’t Stop a 20% Slide
In its first earnings report since going public, Cerebras beat revenue expectations, yet the stock still dropped. The reason was its core gross margin outlook.
Core figures are non-GAAP and exclude items such as customer warrant amortization, data center pass-through revenues and costs, and stock-based compensation. The company guided to a full-year core gross margin of 38% to 41%, below the 47% it posted in the first quarter.
The stock hit a new low on Wednesday, at times trading below its $185 IPO price.
Revenue for the quarter reached $193.4 million, up 94% year over year, while the GAAP net loss narrowed to $14.0 million from $23.9 million a year earlier. GAAP gross margin came in at 45%.
The Equipment ‘Rent-Back’ Weighing on Margins
Feldman told CNBC that investors had misunderstood the margin guidance.
To make capacity available sooner while it builds and deploys its own data center capacity, Cerebras said it will temporarily rent back systems it had already provided to one of its largest customers. That move, the company said, will compress core margins this year.
The company argues that the lower full-year margin reflects a temporary cost of securing equipment to meet demand, rather than a deterioration of the business.
For the second quarter, Cerebras expects core revenue of about $194 million, up 88% year over year, with a core gross margin of 36% to 38%.
The $20 Billion OpenAI Deal Driving Cerebras’s Capacity Push
Cerebras builds large AI chips known as the WSE, using an entire silicon wafer to deliver compute for fast AI inference and training. It stands out as an independent chipmaker in a market dominated by Nvidia’s GPUs.
Demand for AI computing is surging, and Cerebras is rushing to add capacity. Its cloud and services business grew 178% year over year and accounted for 42.8% of revenue.
The company has disclosed a multi-year agreement with OpenAI valued at more than $20 billion, covering 750 megawatts of AI inference capacity. Meeting demand from its largest customers is now the central challenge.
For the full year, Cerebras projects core revenue of $855 million to $865 million, up about 69% at the midpoint.
Whether it can sustain that growth while standing up its own data centers — and reduce its reliance on rented-back systems — will determine how quickly margins recover as it competes with far larger chipmakers like Nvidia.
What to Watch Next
It remains unclear whether the lower core margin outlook is temporary or lasting; that depends on how quickly Cerebras deploys its own data center capacity.
How fully it can meet demand, including the $20 billion OpenAI agreement, with its own equipment is still uncertain. The key question is whether the company can scale back the equipment rent-back and improve its core margins.
Sources
SEC – Cerebras Systems Announces First Quarter Fiscal 2026 Financial Results
Cerebras Systems – Cerebras Systems Announces Strong First Quarter 2026 Results
TechCrunch – Cerebras stock plunges after earnings as CEO says margin outlook was misunderstood
MarketWatch – Cerebras’s stock sinks below IPO price in a major blow to early investors
