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Cerebras Shares Drop Nearly 20% After Margin Forecast
Cerebras Systems reported first-quarter revenue of $193 million, up 94% from a year earlier, but guided for full-year gross margins of 38% to 41%. The stock fell sharply on the narrower outlook, reaching a new low near its IPO price.
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Cerebras Systems shares fell almost 20% on Wednesday after the AI chipmaker issued its first earnings report since going public and guided for narrower gross margins than the 47% posted in the first quarter. The company forecast full-year gross margins of 38% to 41% for its core business.
Officials said the reduction stems from a plan to rent systems back from a customer while the firm builds its own data-center capacity.
Revenue reached $193 million for the quarter, a 94% increase from the same period a year earlier. The net loss narrowed to $14 million from $23.9 million. The company stated that making additional capacity available sooner required the temporary rental arrangement, which will reduce margins this year.
Shares hit a new low on Wednesday, trading close to the IPO price.
The decline occurred despite the stronger-than-expected quarterly results. A company statement noted that investors had misunderstood the margin guidance tied to the rental plan. The stock reaction followed the earnings call in which officials described the capacity arrangement and its effect on near-term profitability.
