'Nvidia Challenger' Cerebras (CBRS.US) Q2 performance misses expectations, hardware revenue drops 23%, shares plunge 16% after hours

According to Jinse Finance APP, after the US stock market closed on Wednesday, AI chip rising star Cerebras Systems (CBRS.US) reported second-quarter results that fell short of expectations, causing its share price to plummet 16%. Data shows the company’s Q2 revenue increased 74% year-on-year to $180.1 million, while analysts had previously expected $194 million. Loss per share was $2.98, while analysts had expected a loss of $0.17 per share.

By segment, second-quarter hardware revenue fell 23% year-on-year to $54.1 million. This suggests the startup, which adopts an innovative chip design architecture, still faces challenges in commercial roll-out. However, cloud and other services revenue hit a record high at $126 million, a 281% increase year-on-year.

The core gross margin for the second quarter was 41%, up about 940 basis points from a year ago.

Since its initial public offering in May, Cerebras’ share price has risen 42%. Cerebras positions itself as a challenger to NVIDIA in the AI chip sector, but its largest revenue source today comes from cloud computing services.

Cerebras CEO Andrew Feldman stated, “The hardware business will be volatile in terms of order delivery and revenue recognition. This is due to industry characteristics.” He added that some clients are not yet ready with the required data center space to house new computing systems.

It’s worth noting that other computing chip and hardware vendors saw strong growth last quarter. AMD’s latest quarterly sales rose 50%, and Intel’s increased 25%. By comparison, Cerebras remains in the early phase of customer expansion and tech promotion, so hardware revenue predictability is still relatively low.

Feldman emphasized that the company remains committed to selling hardware systems and data center services.

Looking ahead, Cerebras expects third-quarter revenue of about $215 million, above analysts’ average expectation of $212 million. Core gross margin is projected to be between 38% and 40%, also above analysts’ average expectation of 36%.

The company raised its full-year revenue guidance to $880 million to $890 million, up from its previous forecast of $855 million to $865 million, while analysts’ consensus expectation is $867.6 million. The company also expects full-year core gross margin will be in the 41%–43% range.

Cerebras’ core technology selling point is its unique high-end processor design—processing a silicon wafer, which is typically used for multiple components, into a single chip. Cerebras has built a massive data center network and offers computing power leasing services externally, initially to verify the feasibility of its technology. With current soaring demand for AI computing power, these leasing services have instead become a key growth engine for the company.