Shares of chip designer Cerebras dropped roughly 14% in pre-market trading on Wednesday, June 24, after the company issued a full-year profit margin outlook that fell short of what it delivered in its first quarter — its debut earnings report following a high-profile initial public offering.
If those losses carried into the regular trading session, the stock would hit its lowest point since going public more than a month ago, potentially erasing more than $6 billion in market value.
Cerebras projected adjusted gross margins of between 38% and 41% for 2026. That compares unfavorably to the 47% margin the company posted in its first quarter. While the forecast came in above the 29.58% that analysts had expected, it still falls significantly behind industry rivals — Nvidia operates in the mid-70% range and Advanced Micro Devices sits in the mid-50% range.
Analysts noted that the company’s margins face pressure from two factors: the relatively large size of the chips it manufactures, and the fact that it is currently leasing back its own systems from an existing client to handle near-term demand while it expands its data center capacity.
Cerebras stock is now down more than 27% from its market debut, as investor enthusiasm for artificial intelligence companies has cooled amid concerns about the enormous costs of building out AI infrastructure.
Still, not all the news was negative. Morgan Stanley raised its price target on the stock to $273, up from $250. Analysts at TD Cowen highlighted that recently signed agreements with Amazon and OpenAI are critical to the company’s long-term growth prospects.
The California-based firm announced a $20 billion multi-year agreement with OpenAI. During a post-earnings call, CEO Andrew Feldman stated that OpenAI’s GPT 5.4 is already running on Cerebras chips, and that the ChatGPT developer plans to deploy 750 megawatts worth of Cerebras semiconductors under the deal.
Feldman also said that Amazon Web Services will begin using Cerebras chips in its data centers in the near future, with revenue from that partnership expected to flow in within the next year.
