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Cerebras Drops 19% in a Month: Buy, Sell or Hold the CBRS Stock?
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Key Takeaways
CBRS shares fell 19.2% in the past month as investors focused on profitability and execution risks.
Cerebras guides Q2 adjusted gross margin of 36-38%, reflecting a sharp sequential decline.
CBRS' OpenAI agreement tops $20B, while its remaining performance obligations total about $25B.
Cerebras Systems (CBRS - Free Report) shares have dropped a massive 19.2% in the past month, underperforming the broader Zacks Business Services sector’s return of 4.5%. The drop can be attributed to investors’ focus more on profitability and execution risks than on revenue growth. In the first quarter of 2026, revenues jumped 94% year over year and 13% sequentially to $193.4 million. However, CBRS reported a loss of 4 cents per share and an adjusted gross margin of 47% in the reported quarter. The company now guides adjusted gross margin between 36% and 38% for the second quarter of 2026, which indicates a significant sequential decline.
For 2026, Cerebras expects gross margin between 38% and 41%, which reflects higher infrastructure investments and temporary capacity costs. Cerebras management disclosed that it is temporarily renting back systems from customers while rapidly expanding cloud capacity to support its more than $20 billion OpenAI agreement. These near-term costs are expected to keep gross margin under pressure until Cerebras’ own data centers come online. As scaling AI infrastructure is expected to remain expensive, CBRS’ profitability is likely to remain under scrutiny.
Investors also remain cautious about Cerebras’ ability to execute on its massive backlog. Concerns include tight data-center capacity, the timing of Amazon Web Services (AWS) deployments, and the potential impact of insider lock-up expirations following the IPO. Cerebras shares have dropped a whopping 33% since its IPO. So, what should investors do with the CBRS stock post the dip? Let us find out.
CBRS’ Wafer-Scale Architecture Aids Prospects
Cerebras’ wafer-scale architecture delivers more than an order-of-magnitude faster inference than conventional GPU systems. CBRS’ WSE-3 processor integrates 4 trillion transistors and 900,000 AI cores on a single wafer, allowing the company to deliver AI inference speeds more than an order of magnitude faster than conventional GPU-based systems. Management also highlighted that the architecture avoids the reliance on high-bandwidth memory, which remains expensive and supply-constrained, potentially giving Cerebras a manufacturing and cost advantage as AI demand continues to accelerate.
The company demonstrated its performance leadership with frontier AI models, expanded deployments with OpenAI, announced GPT-5.4 availability on Cerebras infrastructure, and signed a definitive AWS partnership to deliver disaggregated inference solutions. Cerebras has secured a multi-year agreement with OpenAI worth more than $20 billion to provide 750MW of AI inference capacity, with OpenAI retaining an option to expand deployments to 2 gigawatts. The company also reported remaining performance obligations of approximately $25 billion, providing exceptional long-term revenue visibility.
The business is transitioning beyond hardware into higher-value cloud services. In the first quarter, core cloud and services revenues surged 167% year over year to $79.8 million, while management expects cloud revenue growth to accelerate further throughout 2026 as additional capacity comes online. Management also highlighted improving utilization and premium pricing due to demand exceeding supply. Cerebras is broadening customer access through AWS Marketplace, Microsoft Marketplace, IBM watsonx, Hugging Face, OpenRouter, Vercel AI Gateway and other software ecosystems, which is expected to drive top-line growth.
Cerebras’ prospects are suffering from stiff competition from the likes of NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) in the AI space. NVIDIA is dominating the AI GPU market through its Blackwell, Hopper, DGX/NVL systems that are used for AI training and inference. AMD’s MI300 and MI350 accelerator families are competing with CBRS in hyperscale AI infrastructure and enterprise AI clusters. Meanwhile, Intel’s Gaudi AI accelerators target enterprise AI training and inference as a lower-cost GPU alternative.
NVIDIA, AMD and Intel possess substantially greater financial resources, larger installed customer bases, more comprehensive hardware and software ecosystems and extensive global sales channels, making it challenging for Cerebras to expand market share despite the performance advantages of its wafer-scale AI architecture. In the past month, AMD and Intel shares have jumped 12.6% and 10.9%, respectively, while NVIDIA has dropped 6.2%.
Meanwhile, Cerebras remains highly dependent on a small number of customers. Historically, G42 and MBZUAI represented the vast majority of annual revenues, while OpenAI is expected to account for a substantial portion of future revenues. Any reduction in purchases, contract changes or competitive displacement involving OpenAI, AWS, G42 or MBZUAI could materially impact revenues and cash flows.
CBRS Stock’s Price Performance
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CBRS’ 2026 loss is pegged at 89 cents per share, unchanged over the past 30 days. In comparison, the consensus mark for NVIDIA’s fiscal 2027 earnings is pegged at $9 per share, suggesting 88.7% growth from fiscal 2026’s reported figure. The Zacks Consensus Estimate for AMD’s 2026 earnings is pegged at $7.18 per share, suggesting 72.2% growth from 2025’s reported figure. For Intel, the consensus mark for 2026 is currently pegged at $1.06 per share, suggesting 152.4% growth from 2025’s reported figure.
Cerebras shares are trading at a premium, as suggested by the Value Score of D. However, elevated AI expectations, a decline in gross margin and customer concentration do not justify the premium valuation.
CBRS Valuation
Image Source: Zacks Investment Research
However, Cerebras’ wafer-scale architecture and partnerships with OpenAI and AWS are expected to drive top-line growth.
View the Zacks #1 Rank List
Image: Bigstock
Cerebras Drops 19% in a Month: Buy, Sell or Hold the CBRS Stock?
Key Takeaways
Cerebras Systems (CBRS - Free Report) shares have dropped a massive 19.2% in the past month, underperforming the broader Zacks Business Services sector’s return of 4.5%. The drop can be attributed to investors’ focus more on profitability and execution risks than on revenue growth. In the first quarter of 2026, revenues jumped 94% year over year and 13% sequentially to $193.4 million. However, CBRS reported a loss of 4 cents per share and an adjusted gross margin of 47% in the reported quarter. The company now guides adjusted gross margin between 36% and 38% for the second quarter of 2026, which indicates a significant sequential decline.
For 2026, Cerebras expects gross margin between 38% and 41%, which reflects higher infrastructure investments and temporary capacity costs. Cerebras management disclosed that it is temporarily renting back systems from customers while rapidly expanding cloud capacity to support its more than $20 billion OpenAI agreement. These near-term costs are expected to keep gross margin under pressure until Cerebras’ own data centers come online. As scaling AI infrastructure is expected to remain expensive, CBRS’ profitability is likely to remain under scrutiny.
Investors also remain cautious about Cerebras’ ability to execute on its massive backlog. Concerns include tight data-center capacity, the timing of Amazon Web Services (AWS) deployments, and the potential impact of insider lock-up expirations following the IPO. Cerebras shares have dropped a whopping 33% since its IPO. So, what should investors do with the CBRS stock post the dip? Let us find out.
CBRS’ Wafer-Scale Architecture Aids Prospects
Cerebras’ wafer-scale architecture delivers more than an order-of-magnitude faster inference than conventional GPU systems. CBRS’ WSE-3 processor integrates 4 trillion transistors and 900,000 AI cores on a single wafer, allowing the company to deliver AI inference speeds more than an order of magnitude faster than conventional GPU-based systems. Management also highlighted that the architecture avoids the reliance on high-bandwidth memory, which remains expensive and supply-constrained, potentially giving Cerebras a manufacturing and cost advantage as AI demand continues to accelerate.
The company demonstrated its performance leadership with frontier AI models, expanded deployments with OpenAI, announced GPT-5.4 availability on Cerebras infrastructure, and signed a definitive AWS partnership to deliver disaggregated inference solutions. Cerebras has secured a multi-year agreement with OpenAI worth more than $20 billion to provide 750MW of AI inference capacity, with OpenAI retaining an option to expand deployments to 2 gigawatts. The company also reported remaining performance obligations of approximately $25 billion, providing exceptional long-term revenue visibility.
The business is transitioning beyond hardware into higher-value cloud services. In the first quarter, core cloud and services revenues surged 167% year over year to $79.8 million, while management expects cloud revenue growth to accelerate further throughout 2026 as additional capacity comes online. Management also highlighted improving utilization and premium pricing due to demand exceeding supply. Cerebras is broadening customer access through AWS Marketplace, Microsoft Marketplace, IBM watsonx, Hugging Face, OpenRouter, Vercel AI Gateway and other software ecosystems, which is expected to drive top-line growth.
Stiff Competition & Customer Concentration Hurts CBRS
Cerebras’ prospects are suffering from stiff competition from the likes of NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) in the AI space. NVIDIA is dominating the AI GPU market through its Blackwell, Hopper, DGX/NVL systems that are used for AI training and inference. AMD’s MI300 and MI350 accelerator families are competing with CBRS in hyperscale AI infrastructure and enterprise AI clusters. Meanwhile, Intel’s Gaudi AI accelerators target enterprise AI training and inference as a lower-cost GPU alternative.
NVIDIA, AMD and Intel possess substantially greater financial resources, larger installed customer bases, more comprehensive hardware and software ecosystems and extensive global sales channels, making it challenging for Cerebras to expand market share despite the performance advantages of its wafer-scale AI architecture. In the past month, AMD and Intel shares have jumped 12.6% and 10.9%, respectively, while NVIDIA has dropped 6.2%.
Meanwhile, Cerebras remains highly dependent on a small number of customers. Historically, G42 and MBZUAI represented the vast majority of annual revenues, while OpenAI is expected to account for a substantial portion of future revenues. Any reduction in purchases, contract changes or competitive displacement involving OpenAI, AWS, G42 or MBZUAI could materially impact revenues and cash flows.
CBRS Stock’s Price Performance
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CBRS’ 2026 loss is pegged at 89 cents per share, unchanged over the past 30 days. In comparison, the consensus mark for NVIDIA’s fiscal 2027 earnings is pegged at $9 per share, suggesting 88.7% growth from fiscal 2026’s reported figure. The Zacks Consensus Estimate for AMD’s 2026 earnings is pegged at $7.18 per share, suggesting 72.2% growth from 2025’s reported figure. For Intel, the consensus mark for 2026 is currently pegged at $1.06 per share, suggesting 152.4% growth from 2025’s reported figure.
Cerebras Systems Inc. Price and Consensus
Cerebras Systems Inc. price-consensus-chart | Cerebras Systems Inc. Quote
CBRS Stock: Buy, Sell or Hold?
Cerebras shares are trading at a premium, as suggested by the Value Score of D. However, elevated AI expectations, a decline in gross margin and customer concentration do not justify the premium valuation.
CBRS Valuation
Image Source: Zacks Investment Research
However, Cerebras’ wafer-scale architecture and partnerships with OpenAI and AWS are expected to drive top-line growth.
Cerebras currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to start accumulating the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.