Chip manufacturer Cerebras sees hardware sales decline, causing a sharp drop in after-hours stock price.

Cerebras Systems Inc. fell after hours following the announcement of a decline in hardware revenue, indicating that the recently public company is making slow progress in selling computers that use its new chip designs. The company stated in a release on Wednesday that hardware sales dropped 23% year-over-year to $54.1 million. The highlight of the earnings report was that revenue from its cloud business, which utilizes its technology to provide AI computing power, surged nearly threefold to $126 million. This performance presents a mixed picture for investors. Since its IPO in May, Cerebras' stock has risen 42% overall. The company positions itself as a challenger to Nvidia in the AI chip space, but its largest source of revenue has now shifted to cloud computing. Following the earnings report, Cerebras stock fell about 14%.