Earnings Briefing | Revenue Soars 88% but Expected Loss, Can Cerebras (CBRS.US) Turn OpenAI's Big Orders into a Profit Story?

As AI chip newcomer Cerebras Systems (CBRS.US) is about to announce its second-quarter financial report, the market's attention is highly focused on the contradiction between its soaring revenue and abruptly pressured profit margins. Whether the company can prove its path to scalable profitability to investors after securing significant clients like OpenAI will be key to influencing its stock price. After U.S. markets closed on August 12 (Wednesday), Cerebras Systems, which went public in May of this year, will deliver its second earnings report as a publicly traded company. According to the company's previous guidance, its core revenue for the second quarter is expected to be approximately $194 million, an impressive increase of 88% year-over-year. However, this strong year-over-year growth only reflects a slight increase compared to the first quarter's core revenue of $191.3 million, indicating a deceleration in short-term growth. Core revenue is a non-GAAP metric used by Cerebras that excludes items such as customer warrant amortization and data center pass-through income. Wall Street's current consensus expectations are in line with the company's guidance, expecting revenue of about $191 million. Looking back at the first quarter, Cerebras' total revenue grew by 94% year-over-year to $193.4 million, with cloud and other services revenue skyrocketing 178% to $82.8 million, and hardware revenue rising by 59% to $110.6 million. Profit margins are the biggest concern: Lagging capacity impacts costs Compared to revenue, investors will be more rigorously scrutinizing the quality of Cerebras' profitability this time. Wall Street currently anticipates a net loss of $0.17 per share for Cerebras, a stark contrast to earnings of $1.44 per share in the same period last year. Additionally, the company has already warned in its last financial report that the core gross margin for the second quarter is expected to plummet to between 36% and 38%, well below the first quarter's level of 46.5%. Meanwhile, the projected core operating margin is expected to reach negative 30% to negative 32%. The sharp decline in gross margin is mainly due to the need to satisfy the current surge in AI inference demand. Before fully deploying its own data centers, the company was forced to temporarily lease and rely on clients' own systems (such as expensive compute power from G42) for delivery, which severely eroded profitability. Wedbush analyst Matt Bryson clearly pointed out that the data center space is currently the biggest operational constraint for Cerebras, rather than wafer supply. As of now, Cerebras has locked in approximately 215 megawatts of capacity for 2026. Analysts believe that the faster the company can bring its own data center online, the sooner it can unwind its dependence on high-cost external computing resources. Any signs of margin improvement or turning points could serve as significant catalysts for the stock price. Major partnerships and product expectations: Backed by a lucrative OpenAI contract, WSE-4 is on the horizon Despite short-term profit pressures, Cerebras' business landscape is still rapidly expanding. The company previously announced a multi-year computing power contract with OpenAI valued at over $20 billion and with a capacity of 750 megawatts. Additionally, Cerebras has established a multi-year collaboration with Amazon.com, Inc. (AMZN.US) AWS, bringing its high-speed AI inference technology to the cloud. Furthermore, the company recently secured collaborations with CrowdStrike (CRWD.US) and AMD (AMD.US), including an integration of its Helios architecture to be offered through Cerebras Cloud within the year. Wedbush believes that the partnerships with CrowdStrike and AMD are likely not included in the management's initial performance guidance, indicating that these two projects could provide further upside to performance in the coming quarters. On the hardware iteration front, Cerebras will host its annual Supernova conference on August 18. Wedbush anticipates that this could very well be the moment when the company announces its next-generation WSE-4 processor (it cannot be ruled out that management might preview related product updates during the earnings call). The WSE-4 is expected to achieve significant performance enhancements over the WSE-3, providing Cerebras with opportunities to increase prices and improve profit margins, which have similarly not been fully accounted for in current expectations. Institutions remain firmly bullish: Unique architecture bypasses industry bottlenecks In the face of fierce competition from giants such as NVIDIA Corporation (NVDA.US), AMD, and Broadcom Inc. (AVGO.US), Cerebras stock price has accumulated a decline of about 30% since its IPO. However, before the earnings report is released, Wedbush continues to firmly maintain its "outperform" rating and a target price of $280. Analyst Bryson emphasized that the long-term logic for Cerebras remains unchanged: its wafer-scale engine (WSE) utilizes SRAM instead of the widely scarce and deteriorating-priced HBM memory, bypassing the CoWoS advanced packaging limitations, and continues to use 5nm rather than the more sought-after 3nm process. As 2026 enters its second half and approaches 2027, with a continually deteriorating memory supply and pricing environment throughout the industry, this distinctly different architectural positioning for Cerebras will become increasingly valuable. The market is waiting for management to release clearer signals in this financial report: when new capacity will come online in bulk, when the OpenAI and AWS contracts will begin to contribute materially to revenue, and whether the full-year performance outlook can be maintained or raised. These answers will determine whether this AI chip challenger can regain market confidence.