By Anhata Rooprai and Max A. Cherney
Aug 12 (Reuters) - Cerebras Systems shares plunged roughly 16% in the extended session on Wednesday after the chip designer missed quarterly revenue expectations.
The stock closed up 11.6% during regular trading and has gained 15.5% week-to-date.
While the AI boom has unleashed billions of dollars in spending on chips and infrastructure, Cerebras remains under pressure to prove that its business can scale profitably.
Competition is particularly intense from Nvidia,
which has stepped up efforts to capture the fast-growing AI inference market with technology licensed from startup Groq.
Any signs of slowing customer adoption or a cautious outlook could deepen doubts about Cerebras' ability to gain share from the market leader.
Still, Cerebras raised its annual revenue and gross margin forecasts and said it was not experiencing supply shortages as severe as other chip designers.
Cerebras' flagship wafer-scale engine (WSE) is a single chip the size of a dinner plate containing trillions of transistors, a design that it says is more efficient than connecting thousands of smaller graphics processors together, as Nvidia does.
The company sells both compute hardware and access to its chips through a cloud business, which roughly quadrupled to $126 million, compared with the year-ago quarter. But its hardware sales declined to $54.1 million from $70.3 million a year ago.
ON-CHIP MEMORY BOON TO SUPPLY
Placing memory directly on the chip has lessened the impact of surging memory prices and placed Cerebras in a better position to compete with Nvidia, CEO Andrew Feldman told Reuters in an interview.
"Nvidia's prices have gone through the roof because of HBM prices," Feldman said, referring to the high-bandwidth memory included with AI processors. "This is a battleground, and if they can't deliver or they're having significant component price increases, of course that helps."
Advanced AI chip production is concentrated at Taiwan's TSMC, which faces capacity shortages for the silicon wafers it sells at its most advanced manufacturing processes used by the likes of Advanced Micro Devices and Nvidia.
Cerebras uses TSMC's 5-nanometer process to make its dinner-plate sized chips, which means the company can more readily access supply because it has "less pressure on it than the two and three nanometer nodes," Feldman said.
The Sunnyvale, California-based company expects 2026 adjusted revenue between $880 million and $890 million, higher than its previous forecast of $855 million to $865 million.
"We have made rapid progress in key areas required to deliver exceptional growth against our remaining performance obligations of $25.4 billion (contract revenue expected to be recognized in the future), and plan to more than triple revenue in 2027," finance chief Bob Komin said.
Annual adjusted gross margin is forecast at 41% to 43%, up from 38% to 41% projected earlier. Analysts, on average, estimate 35.89%, according to data compiled by LSEG.
Second-quarter sales rose 74.3% to $180.11 million, while analysts expected $194.23 million. Adjusted loss was $6.91 million, narrower than the $40.5 million loss a year ago.
Cerebras is also racing to expand chip volumes to support a $20 billion multiyear agreement to provide AI compute to OpenAI, a deal viewed as key to justifying its valuation.
(Reporting by Anhata Rooprai in Bengaluru and Max A. Cherney in San Francisco; Editing by Shilpi Majumdar)
