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Cerebras Slumps as Mixed Quarterly Results Test AI Growth Narrative

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Cerebras Systems shares fell more than 18% in premarket trading after the AI chipmaker reported mixed quarterly results that raised fresh questions about whether its hardware business can sustain the growth needed to challenge Nvidia.

The company’s cloud business was the strongest part of the quarter, with revenue roughly quadrupling to $126 million from a year earlier. However, hardware sales, including AI chips, declined to $54.1 million from $70.3 million.

Cerebras also reported a weaker adjusted gross margin of 40.6%, down from 46.5% in the previous quarter, while total revenue missed analyst expectations despite the company raising its annual outlook.

The results suggest Cerebras is becoming increasingly dependent on cloud computing revenue rather than direct AI chip sales. That shift has complicated the company’s growth story, which had been built around positioning its specialized processors as an alternative to Nvidia’s dominant AI hardware.

Investor expectations remain high across the AI infrastructure sector after massive spending commitments from major technology companies. Cerebras shares had risen about 41% from their IPO price before the latest decline, reflecting optimism around continued expansion in AI computing demand.

Analysts now see execution as the key challenge, particularly as Cerebras must rapidly expand infrastructure capacity to support cloud growth while proving that its hardware business can remain competitive.

Cerebras IPO Delayed as US National Security Review Continues

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Cerebras Systems, a California-based AI chipmaker, has experienced further delays in its highly anticipated IPO due to an ongoing national security review by the Committee on Foreign Investment in the United States (CFIUS), sources familiar with the matter confirmed. The delay comes as the company waits for the White House to fill key positions and for CFIUS to conclude its review of a $335 million investment from Abu Dhabi-based cloud computing and AI company G42.

The delay marks a significant hurdle for Cerebras, which has been seeking to go public despite the uncertainty surrounding the approval of G42’s investment. G42’s past ties to China, particularly its connection to Huawei, have drawn scrutiny in Washington. However, the deal had appeared poised for approval late last year before the change in U.S. leadership.

CFIUS, which reviews foreign investments for national security risks, remains cautious about deals involving foreign companies with Chinese links. With the Biden administration’s expansion of CFIUS enforcement, corporate executives have found the regulatory environment less conducive to dealmaking than initially expected.

Despite the ongoing review, Cerebras executives remain optimistic that the investment will eventually be approved, and they intend to proceed with the IPO once the regulatory process is completed. The company’s valuation has nearly doubled since G42’s investment commitment last year, and the IPO remains a crucial step for Cerebras in securing funding for its future growth.