Cerebras Systems experienced a significant decline in its stock value on Wednesday, with shares falling nearly 20%, despite the AI chipmaker reporting stronger-than-anticipated first-quarter earnings just the day before.
The downturn was primarily attributed to the company's first earnings report since its public listing, wherein it projected a reduced gross margin for its core operations. Cerebras Systems guided for a full-year margin of 38% to 41%, a notable decrease from the 47% achieved in the first quarter. This news sent the stock to a new low on Wednesday, nearly touching its initial public offering price.
In an interview with CNBC, Cerebras CEO Andrew Feldman clarified that investors had misinterpreted the company's margin outlook. He explained that a key factor impacting margins was the necessity for Cerebras to temporarily lease back equipment from one of its major clients.
During its earnings call, the company elaborated on this strategy, stating its decision to accelerate capacity availability by temporarily re-renting its own systems from an existing customer. This measure is in place while Cerebras constructs and deploys its proprietary data center infrastructure. The company acknowledged that this temporary arrangement would impact profit margins for the current year.
Despite the margin concerns, Cerebras Systems' earnings report highlighted robust financial performance in other areas for the quarter. Revenue surged to $193 million, marking an impressive 94% increase year-over-year. Furthermore, the net loss significantly narrowed to $14 million, a substantial improvement from the $23.9 million loss reported in the prior year.
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