Cerebras Stock Plunges After Earnings as CEO Says Margin Outlook Was Misunderstood

Shares of Cerebras Systems dropped nearly 20% on Wednesday, despite the company reporting better-than-expected first-quarter earnings on Tuesday. The decline came after the AI chipmaker issued a narrower gross margin forecast for its core business in its first earnings report since going public. Cerebras projected a full-year gross margin of 38% to 41%, compared with the 47% reported in the first quarter. The stock hit a new low on Wednesday, approaching the company's IPO price. CEO Andrew Feldman told CNBC that investors had misunderstood the margin guidance. He explained that Cerebras will need to rent back some equipment from one of its largest customers as it works to expand its own data center capacity. During the earnings call, the company noted that it decided to make more capacity available sooner by temporarily leasing its own systems back from an existing customer while it builds out and deploys its own data center infrastructure. This move, Feldman said, would cut into profit margins this year. Despite the margin concerns, Cerebras reported strong revenue growth. First-quarter revenue reached $193 million, up 94% year-over-year. The net loss narrowed to $14 million, down from $23.9 million in the same period last year.

via TechCrunch AI