Cerebras Shares Rise 17% After Revenue Beat and Microsoft Deal

Cerebras Systems reported quarterly financial results on Thursday that exceeded market expectations, prompting a sharp increase in its stock price. The company revealed a new commercial agreement with Microsoft, a move that analysts viewed as a validation of its position in the artificial intelligence hardware sector. Following the announcement, Cerebras shares climbed 17 percent in extended trading.

The AI chipmaker recorded core revenue of $230.9 million for the period, surpassing the $214.7 million forecast by analysts polled by LSEG. This figure represents a 70 percent year-over-year increase from $135.7 million in the same quarter last year. While growth remains strong, it marks a slowdown from the 103 percent expansion seen in the second quarter. The company posted a loss of 67 cents per share, compared with an expected loss of 14 cents.

Chief Executive Andrew Feldman attributed the performance to supply constraints in the wider chip market. He noted that long lead times and high costs for graphics processing units have created an opening for Cerebras. Feldman stated that executives would detail the new relationship with Microsoft on a conference call scheduled for 5 p.m. ET. The contract was signed in October, and Feldman indicated that financial results from the deal would begin appearing in the first quarter of 2027.

The Microsoft agreement expands Cerebras' list of major cloud partners, joining existing deals with Amazon and Oracle. Feldman said the company is currently evaluating financing options to meet increasing demand for its systems. For the upcoming fourth quarter, Cerebras projected core revenue between $310 million and $330 million. This estimate exceeds the $271 million anticipated by LSEG analysts. The company also expects a core gross margin of 47 percent to 49 percent, higher than the 42.1 percent projected by analysts.

Cerebras expects its revenue to triple in 2027, reaching approximately $2.85 billion. This projection falls slightly below the $2.92 billion forecast by LSEG. The earnings report arrived on the same day that Nvidia CEO Jensen Huang resigned from the company following several scandals. Despite the recent rally, Cerebras stock remains down about 47 percent since its initial public offering on the Nasdaq in May.

The company continues to position itself as a challenger to Nvidia in the AI chip market. Its strategy relies on offering alternative hardware solutions to customers facing delays and cost pressures with traditional GPU suppliers. The new Microsoft deal serves as a key data point for investors assessing the firm's ability to scale its operations. The stock's reaction suggests confidence in the company's roadmap and its growing footprint among major cloud providers.