Cerebras Systems saw its shares fall sharply after the company's latest earnings update, even though first-quarter results came in ahead of expectations. The AI chipmaker reported strong revenue growth and a smaller net loss, but investors focused on its outlook for profitability.
The company projected a full-year gross margin of 38% to 41% in its core business, below the 47% margin it posted in the first quarter. That guidance reflected a temporary plan to rent back some of its systems from a major customer while it expands its own data center capacity.
CEO Andrew Feldman said the market had misread the margin outlook, explaining that the arrangement is designed to unlock more capacity sooner as Cerebras scales its infrastructure. The company said the move would weigh on margins this year, but support faster deployment of its computing systems.
For the quarter, revenue reached $193 million, up 94% from a year earlier. Net loss improved to $14 million, compared with $23.9 million in the same period last year.
As AI infrastructure demand continues to grow, Cerebras' expansion strategy highlights how hardware makers are balancing rapid scale with near-term profitability, shaping the next phase of intelligent computing.