Cerebras Systems, an artificial intelligence chipmaker, experienced a 17% drop in its share price after releasing its first financial results as a public company and providing margin guidance that CEO Andrew Feldman said was 'misunderstood' by investors [1]. The company forecasted that its core gross margin, excluding the impact from customer warrants and data center pass-through revenues, would narrow from 47% in the first quarter to a range between 38% and 41% for the full year through 2026 [1]. Feldman emphasized that Cerebras is currently outperforming the plan it presented ahead of its initial public offering, stating, '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' [1].
Despite the negative market reaction, analysts at Mizuho and Wedbush raised their estimates following the company's earnings call [1]. Feldman explained that the margin guidance reflects the need for Cerebras to rent back some equipment from one of its largest clients, and he cautioned that the company's progress 'is not going to be a straight line' [1].
Another factor weighing on investor sentiment is the staggered lock-up expiration for Cerebras insiders, with about 28 million Class A shares becoming available for trading on the second trading day after the earnings announcement, as outlined in the company's prospectus [1]. Feldman noted that this schedule was designed to smooth out the typical post-IPO lock-up process, but acknowledged, 'Whether that's a success or not, we'll have to see' [1].
Feldman also highlighted that, unlike rivals such as Nvidia, Cerebras does not rely on high-bandwidth memory or advanced processes from Taiwan Semiconductor Manufacturing Co., which are currently facing supply shortages [1]. However, Cerebras is under pressure to open more data centers, a process complicated by public opposition and lengthy permitting procedures [1]. Feldman remarked, 'We're trying to move at the speed of AI, and data centers move with the speed of real estate' [1].
CONCLUSION
Cerebras' first earnings report as a public company led to a sharp decline in its share price, driven by concerns over narrowing gross margins and the upcoming release of insider shares. While analysts raised their estimates, management maintains that the company is ahead of its initial plan and is navigating industry-specific challenges. The market remains cautious as investors digest the company's guidance and the impact of the staggered lock-up expiration.