Cerebras stock falls 20% despite beating earnings as margin guidance disappoints

Cerebras Systems' stock plummeted nearly 20% on Wednesday, wiping out the gains from a better-than-expected earnings report a day earlier. The AI chipmaker forecast gross margins of 38% to 41% for the full year—well below the 47% it reported in Q1—triggering investor concern over profitability.

CEO Andrew Feldman told CNBC that the guidance had been misinterpreted, pointing to a strategic decision to rent back some of its own equipment from a major customer to accelerate capacity deployment. This temporary measure, detailed in the earnings call, would absorb margins this year while the company builds out its own data center infrastructure.

The sell-off drove shares close to Cerebras's IPO price—its lowest level since going public. That's despite solid fundamentals: Q1 revenue hit $193 million (up 94% year-over-year), and net losses narrowed to $14 million from $23.9 million a year prior. The disconnect illustrates how even strong growth can fail to reassure investors when margin expectations shift.