Cerebras Shares Plummet on Mixed Earnings

Cerebras Systems saw its shares plummet by over 18% in premarket trading on Thursday after the company's quarterly earnings failed to meet expectations, sparking doubts about its ability to challenge Nvidia in the AI chip market.

The Sunnyvale-based company's cloud business experienced a significant surge, quadrupling to $126 million from the year-ago quarter, but its hardware sales, including AI chips, declined by nearly 23% to $54.1 million from $70.3 million last year.

Cerebras' second-quarter adjusted gross margin also fell to 40.6% from 46.5% in the prior quarter, and revenue missed analysts' estimates despite a higher annual outlook.

Morgan Stanley analysts noted that 'execution remains the key debate given the scale and speed of the capacity build required to support the ramp,' while Citi and Mizuho slightly cut their price targets for the company.