News about Cerebras

Cerebras Systems (CBRS) fell 10% after short seller Culper Research said its wafers break down after about two years, erasing Tuesday's 10% gain on a deal to offer its systems on Oracle's cloud. Culper also flagged that draft IPO filings through December 2025 gave systems useful lives of 1.5 to 3 years, while a range of 3 to 5 years appeared four months later without explanation. Longer lives mean lower depreciation and fatter margins, and gross margin rose from 11.7% in fiscal 2022 to 42.3% in fiscal 2024 before easing to 39.0% in fiscal 2025. The article says the two-year claim is unproven, and Cerebras trades at about 18x forward sales against a 37x average since it listed in June.

CBRS shares plunged 25.3% over the past month, underperforming the Zacks Business Services sector's 0.3% gain and rivals NVIDIA (up 1.6%) and Advanced Micro Devices (up 9.7%). Near-term margin pressure from renting systems back from customers to expand cloud capacity, along with heavy reliance on OpenAI, has weighed on the stock. Core revenue jumped 103% year over year to $209.9 million in Q2 2026, with core cloud and other services revenue up 287% to $127.7 million, and remaining performance obligations stood at $25.4 billion. Core gross margin fell 590 basis points sequentially to 40.6% in Q2, and the company expects Q3 to be the trough, with core gross margin guided at 38-40%. Management expects margins to recover as higher-cost rented capacity is replaced by Cerebras-owned systems.

The article argues that Nvidia remains the better AI stock for most investors, citing its dominant position in AI chips, triple-digit revenue and profit growth in its latest quarter, and guidance for a 70% revenue increase next fiscal year. Nvidia's stock, which has soared more than 900% over five years, trades at about 24 times forward earnings. It contrasts Nvidia with Cerebras Systems (CBRS), which recently completed its IPO and makes a Wafer-Scale Engine chip 58 times the size of the Nvidia B200, claiming up to 15 times faster inference than GPU solutions. Cerebras' cloud and other services revenue jumped 281% to $126 million last quarter, but its shares, which opened at $350, are down 58% and trade below the $185 IPO price. The author sees Cerebras as an opportunity only for aggressive investors.