Cerebras Reports Strong Q2 Earnings but Shares Drop 15% Amid Rising Costs

Cerebras Systems saw its shares decline by over 15% in after-hours trading following the release of its second quarter earnings report, despite exceeding revenue expectations and raising its full-year outlook.

The AI chipmaker reported core revenue of $209.9 million, marking a 103% increase year-over-year and surpassing analyst predictions of approximately $191 million. GAAP revenue also rose to $180.1 million, a 74% increase, with cloud and other services revenue skyrocketing by 281% to $126 million.

However, the company's operational costs surged significantly as it continues to invest heavily in expanding its AI infrastructure. GAAP operating expenses soared to $502.8 million from $89.3 million a year earlier. Research and development expenses accounted for $320.2 million, while sales and marketing costs rose to $87 million, and general and administrative expenses increased to $95.7 million. Cerebras reported a GAAP net loss of $450.5 million for the quarter, compared to a net income of $309.5 million in the same period last year.

A substantial portion of the expenses stemmed from stock-based compensation, totaling $377 million for the quarter. Additionally, the company is investing in expanding its capacity, with property and equipment purchases reaching $548.9 million in the first half of 2026, securing over 600 megawatts of data center capacity and aiming to increase manufacturing capacity by more than tenfold this year.

Looking ahead, Cerebras anticipates third-quarter core revenue between $214 million and $216 million, exceeding Wall Street expectations, but projects a core operating margin between negative 25% and negative 23%, compared to negative 16% in Q2. The company has raised its full-year core revenue forecast to between $880 million and $890 million and aims to triple revenue by 2027.

As of the end of the quarter, Cerebras reported $25.4 billion in remaining performance obligations and $8.6 billion in cash, restricted cash, and short-term investments.