Cerebras stock sell-off: CEO says margin forecast is 'misunderstood'

Cerebras Systems CBRS shares tanked over 15% on Wednesday morning following its inaugural quarterly earnings report since its blockbuster initial public offering (IPO) last month.

While the artificial intelligence (AI) chipmaker nearly doubled its Q1 revenue to $193 million (approx. R 3,3 billion) and topped Street estimates, investors are concerned about the compressed profitability guidance.

Cerebras expects its core gross margin to fall between 36% and 38% in the current quarter, which would represent a sharp decline from 47% in its fiscal Q1.

However, speaking with CNBC, Cerebras co-founder and CEO Andrew Feldman forcefully pushed back against the negative reaction, arguing the updated margin outlook is heavily “misunderstood”.

At the time of writing, Cerebras stock is down nearly 40% versus its year-to-date high.

Why Cerebras’s stock price decline may be unfair

Feldman clarified that the projected sequential decline in gross margin reflects an infrastructure bottleneck rather than a flaw in product pricing or core demand.

To satisfy an unprecedented rush of orders, the company is temporarily leasing back high-performance systems from its largest buyers while fresh data center infrastructure is constructed.

“Everybody wants more tokens,” he told CNBC, explaining that Cerebras Systems Inc chose to maximize customer satisfaction over short-term numbers.

“We had a choice and we could pass on the demand or we could keep our customers delighted... by renting some of our own gear back and taking a slightly lower margin.”

Crucially, CBRS shares may be attractive to buy on the post-earnings dip today because full-year core gross margin expectations were actually raised by 10 points versus the pre-IPO roadmap.

Titrated lockup expiration may be hurting CBRS shares

The sharp sell-off in Cerebras shares today may be exacerbated due to structural equity dynamics, specifically an unconventional lockup expiration framework.

Unlike traditional IPOs that restrict early investors from selling until a single 180-day cliff passes, CBRS opted for a phased approach designed to mitigate sudden market flooding.

Feldman said the company chose to “titrate out” its lockup restrictions – allowing partial tranches to unlock immediately on day one, followed by additional allocations directly after the first and second earnings calls.

This structured release may have triggered a wave of localized selling volume on Jun 24 as insiders liquidated early positions, creating intense downward pressure despite the underlying operational beat.

Should you buy the dip in Cerebras Systems

Despite immediate market friction, CBRS stock remains attractive because the firm's commercial trajectory is remarkably robust, anchored by a multi-year backlog exceeding $24 billion (approx. R 410,9 billion).

The chipmaker has fully finalized its massive master reseller agreement with OpenAI, a staggering contract worth "north of $20 billion (approx. R 342,4 billion)" to deploy 750 megawatts of specialized inference capacity.

Moreover, the company recently finalized its definitive collaboration agreement with Amazon Web Services (AWS), a partnership designed to put its blazing-fast hardware directly in front of global enterprises.

As the data center shortage eases throughout the back half of 2026 and these mega-contracts begin to filter into official consensus forecasts next year, Feldman remains confident that Cerebras’s hardware advantages will ultimately eclipse near-term infrastructure bottlenecks.