The AI chipmaker beat revenue expectations and raised guidance, but investors zeroed in on a gross margin forecast that pales next to Nvidia's dominance.
Cerebras Systems just delivered its first earnings report as a public company. Wall Street’s response was essentially: “Cool revenue, but about those margins.”
Shares of the AI chipmaker plunged between 10% and 15% on June 24, with intraday losses reaching as much as 19-20%, pushing the stock below its IPO price of $185.
The numbers tell two very different stories
Cerebras beat expectations on the top line. Q1 2026 revenue came in at $193.4 million, a 94% jump year-over-year and comfortably above the analyst consensus of $181.2 million.
The full-year revenue guidance was also above what Wall Street wanted. Cerebras projected $855 to $865 million for 2026, topping the roughly $825 million estimate analysts had penciled in.
So why did the stock crater? Two words: gross margins.
Cerebras posted an adjusted gross margin of 47% in Q1, but guided for a full-year adjusted gross margin of just 38-41%. For context, Nvidia operates with gross margins in the mid-70s percentage range.
From record IPO to below water in six weeks
Cerebras priced its IPO at $185 per share on May 14, 2026, raising $5.55 billion in what was the year’s largest public offering at the time. The company had secured a $1.1 billion investment during its 2025 Series G round.
The stock is now trading below its IPO price, meaning anyone who bought shares at the offering is underwater. Billions in market value evaporated in a single session.
What this means for investors
The margin compression from 47% in Q1 to a guided range of 38-41% for the full year suggests that Cerebras may be pricing aggressively to win deals. The partnerships with OpenAI and AWS remain competitive advantages that could eventually translate into scale that improves margins over time.
