Cerebras Systems shares surged 17% in extended trading on Thursday after the artificial intelligence chipmaker reported better-than-expected quarterly results and issued revenue guidance above Wall Street estimates.
The company also disclosed that it had secured a new agreement with Microsoft, adding another major cloud provider to its growing list of customers.
The company reported adjusted earnings of 12 cents per share, compared with analysts’ expectations of a loss of 14 cents, according to LSEG data. Core revenue reached $230.9 million, beating the consensus estimate of $214.7 million.
Register for the next Tekedia Mini-MBA.
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Revenue increased 70% from $135.7 million in the corresponding period a year earlier. That represented a slowdown from the 103% growth recorded in the second quarter, although the latest figures still exceeded analysts’ expectations.
The results point to growing demand for Cerebras’ specialized computing systems as cloud providers and technology companies expand their artificial intelligence infrastructure. The company is seeking to establish itself as an alternative to Nvidia, whose graphics processing units dominate the market for training and running AI models.
Cerebras Chief Executive Andrew Feldman said the company sees an opportunity to gain market share as customers face long delivery times and rising costs for conventional GPUs.
“I think there is opportunity created by, particularly on the hardware side, the sale of hardware, where long lead times in GPUs and more expense creates opportunity for us,” Feldman told CNBC.
Feldman said Cerebras would announce a new relationship with Microsoft during its conference call with analysts. Microsoft, one of the world’s largest cloud computing providers, signed the agreement in October, with revenue contributions expected to begin in the first quarter of 2027.
“We believe revenue begins to show up in Q1 ’27,” Feldman said.
The agreement expands Cerebras’ relationships with major cloud companies. The chipmaker has also secured deals with Amazon and Oracle, giving it access to customers seeking additional computing capacity for AI workloads.
The Microsoft partnership could provide an important source of future revenue as demand for AI computing continues to rise. However, its financial contribution will take time to materialize, with the company expecting the first revenue from the agreement next year.
Feldman also said Cerebras was evaluating its financing options to support rising demand. Expanding production and delivering large computing systems require substantial capital, particularly as the company seeks to compete with established chip suppliers and meet orders from major technology companies.
2027 Revenue Expected to Triple
Cerebras issued a stronger-than-expected forecast for the fourth quarter. It expects core gross margins of between 47% and 49%, compared with analysts’ estimate of 42.1%.
The company projected revenue of between $310 million and $330 million, ahead of the $271 million expected by analysts surveyed by LSEG.
Cerebras also said it expects revenue to triple in 2027. Based on its current revenue trajectory, that would imply approximately $2.85 billion in annual sales, slightly below the $2.92 billion forecast by analysts.
The guidance suggests management expects demand for its systems to accelerate as its cloud partnerships expand. However, the company’s ability to deliver on that outlook will depend on production capacity, access to financing and the pace at which major customers deploy its technology.
The earnings report also arrived on an eventful day for the broader AI chip industry. Nvidia, the dominant supplier of AI processors, was dealing with a leadership crisis after chief executive Jensen Huang resigned following reports of extramarital affairs and allegations involving a woman suspected by US intelligence of having links to Chinese intelligence. The allegations have intensified scrutiny of the company’s leadership and governance.
Cerebras’ results offer evidence that investors are looking for alternatives in a market where Nvidia’s supply position and pricing have created opportunities for competing chipmakers. However, stronger quarterly performance and new customer agreements do not yet establish that Cerebras can displace Nvidia at scale.
Cerebras shares have fallen about 47% since the company began trading on Nasdaq in May. Therefore, Thursday’s after-hours rally marks a sharp recovery in investor sentiment, although the stock remains below its level at debut.