Cerebras Systems CEO Andrew Feldman said Wednesday that investors "misunderstood" the artificial intelligence chipmaker's margin guidance, as shares slid 17% after the company reported results for the first time since going public. The company forecasted a gross margin between 38% and 41% for the full year in its core business, excluding impact from customer warrants and data center pass-through revenues, compared to 47% in the first quarter. Feldman attributed the investor reaction to confusion over the company's equipment rental arrangement with one of its largest clients, stating management had clearly communicated this plan when Cerebras went public a few months ago.
Analysts Raise Estimates Despite Margin Guidance Concerns
Analysts at Mizuho and Wedbush raised their estimates following Cerebras' earnings call. The first quarter core business gross margin was 47%, with full-year guidance set between 38% and 41%. "You know, we laid out a plan at the start of '26. We shared that plan as we went public a few months ago, and we're beating that plan," Feldman said on CNBC's Squawk on the Street. He said management made clear that Cerebras will need to rent back some equipment from one of its largest clients. "I think it's not going to be a straight line," he said.
Cerebras Implements Staggered Lock-Up Release Schedule
Investors must contend with Cerebras insiders being subject to a staggered timeline for lock-up restrictions. About 28 million Class A Cerebras shares that directors, officers and non-employee shareholders can trade on the second trading day after Tuesday's earnings announcement, according to the company's prospectus. The point was to smooth out the schedule, which typically comes after a set number of months after an initial public offering, Feldman said. "Whether that's a success or not, we'll have to see," he told CNBC's Carl Quintanilla and Leslie Picker.
Company Faces Data Center Expansion Challenges
Cerebras is facing pressure to open more data centers, as are cloud infrastructure providers, while public opposition mounts and permitting processes can drag on. "We're trying to move at the speed of AI, and data centers move with the speed of real estate," Feldman said. Rivals such as Nvidia are confronting supply shortages in high-bandwidth memory and a cutting-edge process from Taiwan Semiconductor Manufacturing Co., but Cerebras doesn't need either of those, Feldman said.
FAQ
What margin guidance did Cerebras provide after its first earnings report as a public company?
Cerebras forecasted a gross margin between 38% and 41% for the full year in its core business, excluding impact from customer warrants and data center pass-through revenues. The company reported a 47% gross margin in the first quarter.
Why did Cerebras stock drop 17% after earnings?
Shares slid following the company's margin guidance announcement. CEO Andrew Feldman said Wednesday that investors "misunderstood" the forecast, particularly regarding the company's plan to rent back equipment from one of its largest clients.
How many Cerebras shares became available for trading after the earnings announcement?
About 28 million Class A Cerebras shares held by directors, officers and non-employee shareholders can trade on the second trading day after Tuesday's earnings announcement, according to the company's prospectus.
