Cerebras stock plunges after earnings as CEO says margin outlook was misunderstood

Cerebras Systems' stock price experienced a significant decline following its first earnings report as a public company, with shares dropping by 24% in after-hours trading on May 29, 2024. The downturn was primarily attributed to the company's guidance for its core wafer-scale engine business, which projected a gross margin of 40% to 42% for the second quarter. CEO Andrew Feldman stated in an interview that the market misunderstood the company's margin outlook, emphasizing that the figure referred to the gross margin of the hardware product itself, excluding associated services and software. He further clarified that the overall gross margin, including these additional components, is expected to be in the high 40s to low 50s percentage range. Feldman also highlighted that Cerebras is experiencing strong demand for its AI supercomputers, with bookings increasing by 60% year-over-year in the first quarter, reaching $100 million. The company secured new customer wins, including a significant deal with a major cloud provider, and expanded its existing relationships with key clients. Despite the stock market reaction, Feldman expressed confidence in Cerebras's long-term growth trajectory and its ability to capture a substantial share of the rapidly expanding AI infrastructure market.