Cerebras Shares Slide After Earnings as CEO Clarifies Margin Forecast

Shares of Cerebras Systems fell nearly 20% on Wednesday, despite the AI chip company reporting first-quarter earnings on Tuesday that exceeded Wall Street expectations.

The decline followed the company’s first earnings report as a publicly traded company, in which it projected a lower gross margin for its core operations. Cerebras expects its full-year gross margin to range between 38% and 41%, compared with 47% in the first quarter. The sharp sell-off pushed the stock to a new low, bringing it close to its initial public offering price.

Cerebras CEO Andrew Feldman told CNBC that the market had misunderstood the company’s margin outlook. He explained that Cerebras would temporarily lease back some of its equipment from one of its largest customers, a move that affected the guidance provided to investors.

During the company’s earnings call, executives said Cerebras chose to increase available computing capacity more quickly by temporarily renting back its own systems from an existing customer, while continuing to build and expand its data centre infrastructure. The company noted that this strategy would reduce profit margins during the current year.

According to the quarterly earnings report, Cerebras generated $193 million in revenue in the first quarter, representing a 94% increase from the same period a year ago. The company’s net loss also improved, narrowing to $14 million from $23.9 million in the corresponding quarter last year.