Cerebras Systems reported first-quarter revenue of $193.4 million on Tuesday, up 94% from a year earlier, but the stock fell about 11% in after-hours trading as the company warned that profit margins would decline through the rest of the year.
Net loss for the quarter came to $14 million, or 22 cents per share, compared with $23.9 million, or 46 cents per share, in the year-ago period. First-quarter core gross margin, the company's preferred non-GAAP profitability measure, reached 46.5%, though Cerebras projected that figure would erode to 36%-38% in the current quarter and settle in a range of 38%-41% over the full year.
On a post-earnings call with analysts, CFO Bob Komin explained that a key driver of the compressed margins was an arrangement under which Cerebras is temporarily leasing back data center capacity it had previously deployed with an existing client in order to satisfy near-term demand. Komin said the leaseback would weigh on core cloud and services gross margins by 10 to 15 percentage points for the remainder of 2026, with the company aiming to eventually reach a long-term gross margin target of at least 60%.
"The additional cost of renting third-party capacity will depress core cloud and other services margin temporarily from current levels," Komin said, according to Reuters.
Second-quarter core revenue guidance came in at roughly $194 million, an 88% year-over-year increase. For all of 2026, Cerebras pegged core revenue in a range of $855 million to $865 million, which would represent growth of about 69% at the midpoint. Core operating margins are expected to remain negative for the full year, in a range of negative 28% to negative 32%.
In the first quarter, Cerebras also disclosed a multi-year OpenAI agreement with a total value exceeding $20 billion, covering the deployment of 750 megawatts of Cerebras computing infrastructure by the ChatGPT maker. The company also began a partnership with Amazon $AMZN Web Services to bring its inference technology to that platform.
Trading on the Nasdaq $NDAQ since its May IPO, which was priced at $185 per share and raised $5.55 billion, Cerebras saw its debut session open at $350 before the stock gradually gave back those gains, arriving at Tuesday's regular-session close of $226.72. The company subsequently closed a Series H financing and received a $1 billion working capital loan from OpenAI, raising an additional $6.4 billion in gross IPO proceeds, the company said.
The full-year gross margin outlook of 38%-41% puts Cerebras well behind the profitability benchmarks of larger chip rivals — Nvidia $NVDA operates with gross margins hovering in the mid-70s, while Advanced Micro Devices sits in the mid-50% range. The Santa Clara company builds wafer-scale processors aimed at the AI inference market, where it competes with Nvidia.