Cerebras Stock Drops 14% After First Earnings Report as Full-Year Gross Margin Guidance Falls Far Below NVIDIA
Taylor Wilson
Cerebras guided full-year gross margin at 38%–41% in its first post-IPO earnings — far below Nvidia's ~75% — sending shares down ~14% pre-market and wiping over $6 billion in market cap. The question now: can big-chip economics work at scale?
Why did the market react so sharply?
The trigger was one number: full-year adjusted gross margin guidance of 38%–41%, down from an actual 47% in Q1.
This means → management itself expects profitability to deteriorate through the rest of the year — not a seasonal dip, but a full-year downward trend.
Shares fell roughly 14% pre-market; if the decline holds through the close, it would mark the lowest price since the IPO over a month ago.
How does this compare to Nvidia and AMD?
Nvidia's gross margin sits around 75%; AMD's around 55%. Cerebras's 38%–41% guidance trails both by a wide margin.
In plain terms = for every dollar of chips sold, Nvidia keeps about 75 cents as gross profit; Cerebras keeps under 40 cents.
The guidance did beat analysts' prior consensus of 29.58%, but the market focused on the gap to industry leaders, not the beat over low expectations.
Why is the margin so low?
Structural reason one: Cerebras produces wafer-scale chips — an entire silicon wafer becomes a single chip, with no dicing — making manufacturing costs far higher than conventional chips.
Structural reason two: the company's own data centers are not yet built, so it must lease back systems it already sold to customers to meet near-term compute demand.
This means → these are not one-off charges but ongoing cost pressure that persists until in-house capacity comes online.
Can the big contracts support long-term growth?
The headline deal: a $20 billion multi-year agreement with OpenAI. CEO Andrew Feldman said OpenAI's GPT 5.4 model is already running on Cerebras chips.
OpenAI plans to deploy 750 megawatts of Cerebras compute under the deal — in plain terms = roughly the electricity consumption of a mid-sized city, all dedicated to AI.
Amazon Web Services (AWS) is about to begin using Cerebras chips in its data centers, with related revenue expected to start flowing within the next year.
What does Wall Street think?
Morgan Stanley raised its price target from $250 to $273 after the report, maintaining a positive long-term outlook.
TD Cowen called the Amazon and OpenAI contracts the key to Cerebras's long-term growth.
The reality check: shares have fallen over 27% since the IPO, weighed down by a broader AI-stock cool-off and market concern over massive infrastructure spending.
What to watch next?
The single most important variable: whether full-year gross margin can recover as proprietary data-center capacity comes online.
This reflects a deeper question — Cerebras's wafer-scale chip approach carries inherently higher costs, and whether the business model works depends on scale economics outrunning manufacturing expense.
In plain terms = the big customer orders are already signed; what remains to be proven is whether selling these chips can actually make money.
Content is for reference only, not financial advice.