Cerebras surges 11% after beating on quarterly revenue and announcing Microsoft deal
Stock rises 11% in extended trading after earnings beat and new cloud provider partnership
Quick Look
- Cerebras Systems reported better-than-expected quarterly revenue and guidance, announced a new deal with Microsoft, and saw its stock rise 11% in extended trading.
- The AI chipmaker expects revenue to triple in 2027 and is evaluating financing options as it challenges Nvidia.
AI-generated summary
Why It Matters
Cerebras Systems debuted on Nasdaq in May and its shares have slumped about 47% since. The company is trying to challenge Nvidia in the AI chip market and has landed deals with major cloud providers including Amazon and Oracle.
Cerebras Systems reported better-than-expected revenue and quarterly guidance in its earnings report on Thursday, and touted a new deal with Microsoft. The stock soared 11% in extended trading.
Here's how the company performed relative to LSEG consensus:
Loss per share: 67 cents. It's not immediately clear how the number compares with the loss of 14 cents expected
Core revenue: $230.9 million vs. $214.7 million expected
Cerebras' core revenue grew 70% from $135.7 million, compared with 103% growth in the second quarter, according to a statement.
"I think there is opportunity created by, particularly on the hardware side, the sale of hardware, where long lead times in GPUs and more expense creates opportunity for us," Cerebras CEO Andrew Feldman told CNBC in an interview, referring to graphics processing units.
Executives will announce a new relationship with Microsoft, one of the world's top cloud providers, on a conference call with analysts, Feldman said. The call starts at 5 p.m. ET.
"We believe revenue begins to show up in Q1 '27," Feldman said in the interview, adding that Microsoft signed the deal in October. Cerebras has also landed deals with other major cloud providers Amazon and Oracle.
Cerebras is evaluating its financing options to meet the ramping demand, Feldman said in the interview.
The company is trying to challenge Nvidia in the AI chip market. Its earnings land on the same day that Nvidia CEO Jensen Huang resigned from the company he co-founded after multiple scandals involving extramarital affairs.
For the fourth quarter, Cerebras expects a core gross margin of 47% to 49%, with $310 million to $330 million in revenue. Analysts polled by LSEG were looking for a 42.1% margin and $271 million in revenue.
Cerebras said it expects revenue to triple in 2027. That implies about $2.85 billion in revenue. Analysts surveyed by LSEG were looking for $2.92 billion.
Cerebras shares have slumped by about 47% since the company debuted on Nasdaq in May.
What to Watch
AI outlook — possibilities, not facts
Cerebras revenue will begin showing up from the Microsoft deal in Q1 2027
Likely · Within months
Cerebras revenue will triple in 2027
Possible · Within months
Open Questions
- What are the specific terms of the Microsoft deal?
- What financing options is Cerebras evaluating?
- How does Cerebras' loss per share of 67 cents compare with the expected loss of 14 cents?
