Cerebras Systems shares tumbled about 10% in premarket trading on Wednesday after the artificial intelligence chipmaker forecast lower profit margins for 2026.
The outlook overshadowed better-than-expected quarterly results and highlights the costs of scaling its rapidly growing AI infrastructure business.
If losses hold, the stock is on track to trade at its lowest level since its market debut more than a month ago and erase more than $6 billion in market value.
The decline adds to a sharp pullback in the stock since its blockbuster initial public offering.
Shares are now down more than 27% from their debut as enthusiasm around artificial intelligence stocks cools and investors increasingly question the massive spending required to build AI infrastructure.
The company reported revenue of $193 million for the quarter, topping analyst estimates of $181 million and rising 94% from a year earlier.
Cerebras also posted an adjusted operating loss of $3.5 million, an improvement from a loss of $19.3 million in the same period last year.
The company forecast second-quarter revenue of $194 million, representing year-over-year growth of 88% and exceeding Wall Street expectations of $178 million.
Margin outlook weighs on investor sentiment
Despite the strong top-line performance, investors focused on the company’s profitability outlook.
Cerebras projected adjusted gross margins of between 38% and 41% for 2026, well below the 47% margin reported in the first quarter.
Although the forecast exceeded analyst expectations of 29.58%, it remains significantly lower than the margin profiles of major semiconductor peers.
Nvidia has reported gross margins in the mid-70% range, while Advanced Micro Devices has generated margins in the mid-50% range.
Analysts have previously warned that Cerebras’ margins could come under pressure because of its relatively larger chip designs and the costs associated with meeting surging customer demand.
During its earnings call, the company said demand from OpenAI’s cloud operations is growing faster than it can bring new servers online.
To bridge the gap, Cerebras decided to rent back equipment it had previously sold to other customers and redeploy it to OpenAI. The arrangement is expected to weigh on profitability this year.
The company’s revenue picture is also complicated by warrants for 33.4 million shares granted to OpenAI.
The value of these warrants is recognized as a sales discount, creating a noncash contra-revenue charge that analysts expect to grow as the OpenAI contract ramps up.
OpenAI and AWS agreements underpin growth outlook
Despite concerns about margins, analysts continue to point to the company’s long-term growth prospects.
Morgan Stanley raised its price target on Cerebras to $273 from $250, while TD Cowen said agreements with Amazon and OpenAI remain critical to the company’s future.
Cerebras has signed a $20 billion multi-year agreement with OpenAI. Chief Executive Officer Andrew Feldman said on the post-earnings call that OpenAI’s GPT 5.4 is currently running on Cerebras chips.
The ChatGPT maker is expected to deploy 750 megawatts of Cerebras semiconductors under the agreement.
Feldman also said Amazon Web Services will soon begin using Cerebras chips in its data centers, with revenue contributions expected next year.
The arrangement would make AWS the first major cloud provider to host Cerebras’ AI chips.
At the end of 2025, Cerebras reported a backlog of $24.6 billion, largely driven by the OpenAI agreement.
The company expects to recognize $3.7 billion of that backlog as revenue during 2026 and 2027.
Cerebras has experienced significant volatility since its IPO. The stock was priced at $185 in May and surged to as high as $386 on its first day of trading before retreating sharply.
The upcoming lockup expirations could add further pressure to the stock.
Nearly 13% of IPO shares become eligible for sale this week, while another 17% of shares are scheduled to become tradable shortly after the company reports second-quarter earnings.
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