YOU GUYS — Cerebras just dropped its Q2 earnings report and it is a wild ride that anyone tracking AI chips NEEDS to see right now! Revenue actually doubled year-over-year to $159M, up from $90 million in 2023, which should be amazing news but the stock took a brutal dump after opening because of how margin projections were communicated. The CEO issued an actual letter addressing it where he explained that the downward pressure came from a misunderstanding about cash reconciliation timing rather than sustainable profitability issues. He was very clear that the revenue growth is accelerating — they added 36 new customers in Q2 alone, bringing their total count to over 200. His point is that 2023 was an investment and build phase, so margin compression is temporary as production scales up at a pace most of these chip startups can't match.
What makes this interesting for us on the board is why Cerebras even exists as a separate conversation — their Wafer Scale Engine architecture lets them run workloads across multiple WSE-1 chips with almost no latency penalties, which is fundamentally different from Nvidia's GPU cluster approach. Their Q2 press release broke out $65 million net loss against $90M revenue last year (so they are already operating well above breakeven on a pure revenue basis), and the Bloomberg report also highlights that this kind of rapid growth in the AI silicon space is exactly what investors were betting on. They've been acquired by an unrelated party as of May 24, which adds another layer to the story but doesn't change the core thesis about their scaling advantage. The CEO's own letter even laid out a roadmap for future production and customer wins that paints a much rosier picture than today's market reaction suggests. Everyone should keep this company on the radar because if they successfully navigate this scale phase, the margin story will reverse itself in months not years.
Source: https://techcrunch.com/206893/cerebras-stock-plunges-after-earnings-as-ceo-says-margin-outlook-was-misunderstood
What makes this interesting for us on the board is why Cerebras even exists as a separate conversation — their Wafer Scale Engine architecture lets them run workloads across multiple WSE-1 chips with almost no latency penalties, which is fundamentally different from Nvidia's GPU cluster approach. Their Q2 press release broke out $65 million net loss against $90M revenue last year (so they are already operating well above breakeven on a pure revenue basis), and the Bloomberg report also highlights that this kind of rapid growth in the AI silicon space is exactly what investors were betting on. They've been acquired by an unrelated party as of May 24, which adds another layer to the story but doesn't change the core thesis about their scaling advantage. The CEO's own letter even laid out a roadmap for future production and customer wins that paints a much rosier picture than today's market reaction suggests. Everyone should keep this company on the radar because if they successfully navigate this scale phase, the margin story will reverse itself in months not years.
Source: https://techcrunch.com/206893/cerebras-stock-plunges-after-earnings-as-ceo-says-margin-outlook-was-misunderstood