Cerebras Systems Inc (NASDAQ:CBRS) shares tumbled more than 17% in Thursday premarket trading after the AI infrastructure company reported second-quarter earnings and revenue below Wall Street expectations. Despite the headline miss, rapid growth in its core and cloud businesses, improved margins and higher full-year guidance prompted Morgan Stanley analysts to argue that the share-price weakness could represent a buying opportunity.
Cerebras misses headline Q2 expectations
For the quarter ended June 30, Cerebras reported an adjusted loss of $2.98 per share, substantially wider than the $0.18-per-share loss expected by analysts.
Reported revenue was $180.1 million, falling short of the $193.6 million consensus estimate and declining 7% from $193.6 million in the same period last year.
However, the company’s underlying operations delivered a considerably stronger performance. Core revenue, which excludes data centre pass-through revenue, reached $209.9 million, representing year-over-year growth of 103%.
“This was an outstanding quarter for Cerebras. Core revenue more than doubled to $210 million, and our cloud business nearly quadrupled year-over-year,” said Andrew Feldman, Cerebras co-founder and CEO.
Cloud revenue nearly quadruples
Cerebras continued to record particularly strong expansion across its cloud operations.
GAAP cloud revenue climbed 281% year over year to $126.0 million, while core cloud revenue increased 287% to $127.7 million.
Profitability metrics also moved in a favourable direction. Core gross margin reached 41%, improving by approximately 940 basis points compared with the second quarter of 2025.
Core operating margin improved by around 2,600 basis points year over year to negative 16%, indicating that the company’s rapidly expanding core business is moving closer to operating profitability.
Morgan Stanley sees weakness as a buying opportunity
Morgan Stanley analysts focused on the strength of Cerebras’s underlying hardware and cloud operations rather than the weaker headline numbers.
“Cerebras posted upside to both core hardware and cloud, with higher forecasts for the year, and a positive characterization of newer disaggregated inference opportunities at AMD,” Morgan Stanley analysts said in a note.
“Stock weakness after hours on a strong quarter should prove a buying opportunity,” they said.
The analysts’ positive assessment reflects both the company’s accelerating cloud growth and potential opportunities emerging from new approaches to AI inference infrastructure.
AMD and AWS partnerships could improve AI economics
Cerebras is working with both AMD and AWS Trainium on disaggregated inference, an approach that separates different stages of AI inference workloads across specialised hardware.
Under the model, GPUs or other accelerators handle the prefill stage, while Cerebras systems perform decoding. Management believes the architecture could increase throughput by as much as five times while maintaining Cerebras’s advantage in inference speed.
Morgan Stanley analysts said the economic benefits could be substantial. Increasing the number of tokens processed for a given system and power footprint could reduce the cost per token even after accounting for the additional hardware required.
That could potentially give Cerebras greater flexibility to expand margins, lower prices or compete more aggressively in markets where customers are particularly sensitive to computing costs.
Cerebras raises full-year core revenue guidance
Despite the headline second-quarter miss, management increased its expectations for 2026.
For the third quarter, Cerebras forecast core revenue of between $214 million and $216 million, implying a midpoint of $215 million.
The company also raised its full-year 2026 core revenue outlook to between $880 million and $890 million.
Core gross margin is expected to range from 41% to 43%, while core operating margin is forecast between negative 19% and negative 17%.
Cerebras also reported $25.4 billion in remaining performance obligations as of June 30, 2026, providing substantial visibility into contracted future business.
The company has additionally secured 600 MW of data centre capacity under contract as it prepares infrastructure to support further expansion.
While the sharp premarket decline reflects disappointment with Cerebras’s headline earnings and revenue figures, the rapid growth of its core cloud operations, improving margins, increased guidance and sizeable contracted backlog provide a more positive picture of the company’s underlying momentum.
Cerebras Systems stock price
