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Cerebras (CBRS - Free Report) shares have plunged 25.3% in the past month, underperforming the broader Zacks Business Services sector, which returned 0.3%.
The company’s shares have also underperformed its competitors, which include NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) , and Intel (INTC - Free Report) in the AI space. Shares of NVIDIA and Advanced Micro Devices gained 1.6% and 9.7%, respectively, while Intel lost 5.6% over the past month.
The underperformance can be attributed to near-term margin pressure from higher costs associated with renting back systems to expand its cloud capacity. Data center availability constraints and deployment delays could limit revenue growth, while significant investments in manufacturing and infrastructure weigh on profitability. Heavy dependence on OpenAI poses customer concentration risks.
CBRS Stock Performance
Image Source: Zacks Investment Research
However, Cerebras is benefiting from surging demand for high-speed AI inference, expanding cloud deployments and strategic partnerships with hyperscalers. Growing data center capacity, manufacturing expansion and a strong backlog are supporting its long-term growth prospects.
CBRS Benefits From Strong AI Demand and Backlog Growth
Cerebras is benefiting from robust demand for artificial intelligence (AI) infrastructure, driven by the rapid adoption of high-speed inference across enterprises, hyperscalers and AI developers. The company’s second-quarter 2026 core revenues surged 103% year over year to $209.9 million, reflecting strong demand for its AI computing solutions. Core cloud and other services revenues jumped 287% to $127.7 million, supported by expanding OpenAI deployments and increased cloud customer usage.
The company is aggressively expanding its data center footprint to capitalize on increasing AI infrastructure investments. The company secured more than 600 megawatts of data center capacity, either operational or under contract for delivery by the end of 2027. Its manufacturing expansion initiatives, supported by partnerships with Flex, Sanmina and TSMC, are expected to increase manufacturing capacity by more than tenfold in 2026. These investments position Cerebras to address growing customer demand and accelerate revenue growth.
Strategic collaborations with OpenAI, Amazon Web Services (AWS) and other hyperscalers further strengthen Cerebras’ growth prospects. Its partnership with OpenAI is supporting strong demand for high-speed AI inference, while AWS integration through Amazon Bedrock, expected to become generally available in the first quarter of 2027, should expand enterprise adoption. Growing customer engagements across AI coding, agentic workflows and cybersecurity provide additional opportunities to diversify its revenue streams.
Cerebras’ strong backlog also supports future upside. Remaining performance obligations stood at $25.4 billion as of June 30, 2026, supporting investments in infrastructure and manufacturing expansion. The company expects core revenues to more than triple in 2027, followed by significant growth in subsequent years. Expanding adoption across AI coding, agentic workflows and cybersecurity applications is expected to strengthen Cerebras’ long-term growth trajectory.
CBRS’ Estimate Revisions Show Improving Trend
Cerebras robust AI infrastructure demand, expanding capacity, strategic partnerships and strong revenue visibility are expected to benefit the company’s top-line growth. For the third quarter of 2026, Cerebras expects core revenues to be in the range of $214-$216 million.
The Zacks Consensus Estimate for third-quarter 2026 loss is pegged at 13 cents per share, narrower than 32 cents over the past 90 days.
The consensus estimate for CBRS’ 2026 loss is pegged at 52 cents per share, narrower than a loss of 89 cents per share over the past 90 days.
CBRS Grapples With Rising Costs and Fierce Competition
Despite CBRS’s expanding AI Infrastructure portfolio, the company is suffering from rising infrastructure investments and near-term margin pressure associated with its aggressive capacity expansion. In the second quarter of 2026, core gross margin declined 590 basis points (bps) sequentially to 40.6% as Cerebras temporarily rented systems back from customers to satisfy strong inference demand.
The company expects the third quarter of 2026 to represent the trough, with core gross margin guided to 38-40%, while core operating margin is expected to deteriorate to negative 25-23% from negative 16% in the second quarter of 2026. Although management expects margins to recover as higher-cost rented capacity is replaced by Cerebras-owned systems, near-term margin pressure likely tempered enthusiasm about the revenue outlook. For 2026, Cerebras now expects core gross margin between 41% and 43%, while operating margin is in the negative 19-17% range.
Stiff competition from companies like NVIDIA, Advanced Micro Devices and Intel also remains a concern. NVIDIA dominates the AI GPU market with its Blackwell, Hopper and DGX/NVL systems used for AI training and inference. Advanced Micro Devices’ 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.
Cerebras shares are also trading at a premium, as suggested by the Value Score of D.
CBRS Stock: Here’s Why You Should Hold
Cerebras is benefiting from strong demand for fast inference, a $25.4 billion RPO, rapidly expanding manufacturing and data-center capacity, improving earnings estimates and partnerships that could broaden its customer base.
Moreover, Wall Street’s consensus price target implies roughly 104.13% upside from current levels.
Image Source: Zacks Investment Research
However, near-term margin compression, persistent losses, elevated spending, customer concentration and intense competition remain key concerns. Stretched valuation also remains a concern,
View the Zacks #1 Rank List
Image: Bigstock
Should You Hold on to Cerebras Stock Despite Its 25% One-Month Dip?
Key Takeaways
Cerebras (CBRS - Free Report) shares have plunged 25.3% in the past month, underperforming the broader Zacks Business Services sector, which returned 0.3%.
The company’s shares have also underperformed its competitors, which include NVIDIA (NVDA - Free Report) , Advanced Micro Devices (AMD - Free Report) , and Intel (INTC - Free Report) in the AI space. Shares of NVIDIA and Advanced Micro Devices gained 1.6% and 9.7%, respectively, while Intel lost 5.6% over the past month.
The underperformance can be attributed to near-term margin pressure from higher costs associated with renting back systems to expand its cloud capacity. Data center availability constraints and deployment delays could limit revenue growth, while significant investments in manufacturing and infrastructure weigh on profitability. Heavy dependence on OpenAI poses customer concentration risks.
CBRS Stock Performance
Image Source: Zacks Investment Research
However, Cerebras is benefiting from surging demand for high-speed AI inference, expanding cloud deployments and strategic partnerships with hyperscalers. Growing data center capacity, manufacturing expansion and a strong backlog are supporting its long-term growth prospects.
CBRS Benefits From Strong AI Demand and Backlog Growth
Cerebras is benefiting from robust demand for artificial intelligence (AI) infrastructure, driven by the rapid adoption of high-speed inference across enterprises, hyperscalers and AI developers. The company’s second-quarter 2026 core revenues surged 103% year over year to $209.9 million, reflecting strong demand for its AI computing solutions. Core cloud and other services revenues jumped 287% to $127.7 million, supported by expanding OpenAI deployments and increased cloud customer usage.
The company is aggressively expanding its data center footprint to capitalize on increasing AI infrastructure investments. The company secured more than 600 megawatts of data center capacity, either operational or under contract for delivery by the end of 2027. Its manufacturing expansion initiatives, supported by partnerships with Flex, Sanmina and TSMC, are expected to increase manufacturing capacity by more than tenfold in 2026. These investments position Cerebras to address growing customer demand and accelerate revenue growth.
Strategic collaborations with OpenAI, Amazon Web Services (AWS) and other hyperscalers further strengthen Cerebras’ growth prospects. Its partnership with OpenAI is supporting strong demand for high-speed AI inference, while AWS integration through Amazon Bedrock, expected to become generally available in the first quarter of 2027, should expand enterprise adoption. Growing customer engagements across AI coding, agentic workflows and cybersecurity provide additional opportunities to diversify its revenue streams.
Cerebras’ strong backlog also supports future upside. Remaining performance obligations stood at $25.4 billion as of June 30, 2026, supporting investments in infrastructure and manufacturing expansion. The company expects core revenues to more than triple in 2027, followed by significant growth in subsequent years. Expanding adoption across AI coding, agentic workflows and cybersecurity applications is expected to strengthen Cerebras’ long-term growth trajectory.
CBRS’ Estimate Revisions Show Improving Trend
Cerebras robust AI infrastructure demand, expanding capacity, strategic partnerships and strong revenue visibility are expected to benefit the company’s top-line growth. For the third quarter of 2026, Cerebras expects core revenues to be in the range of $214-$216 million.
The Zacks Consensus Estimate for third-quarter 2026 loss is pegged at 13 cents per share, narrower than 32 cents over the past 90 days.
The consensus estimate for CBRS’ 2026 loss is pegged at 52 cents per share, narrower than a loss of 89 cents per share over the past 90 days.
Cerebras Systems Inc. Price and Consensus
Cerebras Systems Inc. price-consensus-chart | Cerebras Systems Inc. Quote
CBRS Grapples With Rising Costs and Fierce Competition
Despite CBRS’s expanding AI Infrastructure portfolio, the company is suffering from rising infrastructure investments and near-term margin pressure associated with its aggressive capacity expansion. In the second quarter of 2026, core gross margin declined 590 basis points (bps) sequentially to 40.6% as Cerebras temporarily rented systems back from customers to satisfy strong inference demand.
The company expects the third quarter of 2026 to represent the trough, with core gross margin guided to 38-40%, while core operating margin is expected to deteriorate to negative 25-23% from negative 16% in the second quarter of 2026. Although management expects margins to recover as higher-cost rented capacity is replaced by Cerebras-owned systems, near-term margin pressure likely tempered enthusiasm about the revenue outlook. For 2026, Cerebras now expects core gross margin between 41% and 43%, while operating margin is in the negative 19-17% range.
Stiff competition from companies like NVIDIA, Advanced Micro Devices and Intel also remains a concern. NVIDIA dominates the AI GPU market with its Blackwell, Hopper and DGX/NVL systems used for AI training and inference. Advanced Micro Devices’ 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.
Cerebras shares are also trading at a premium, as suggested by the Value Score of D.
CBRS Stock: Here’s Why You Should Hold
Cerebras is benefiting from strong demand for fast inference, a $25.4 billion RPO, rapidly expanding manufacturing and data-center capacity, improving earnings estimates and partnerships that could broaden its customer base.
Moreover, Wall Street’s consensus price target implies roughly 104.13% upside from current levels.
Image Source: Zacks Investment Research
However, near-term margin compression, persistent losses, elevated spending, customer concentration and intense competition remain key concerns. Stretched valuation also remains a concern,
Cerebras currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.