Cerebras Systems saw its stock jump 17% in extended trading after reporting better-than-expected earnings and announcing a new deal with Microsoft. The company said core revenue grew 70% to $135.7 million in the quarter, compared with 103% growth in the second quarter, according to a statement. For the fourth quarter, Cerebras expects core gross margin between 47% and 49%, with revenue projected at $310 million to $330 million, beating analyst expectations from LSEG, which had predicted a 42.1% margin and $271 million in revenue.
The Microsoft partnership marks a significant win for Cerebras as it tries to compete with Nvidia in the artificial intelligence chip sector. CEO Andrew Feldman told CNBC that Microsoft signed the deal in October, with revenue expected to begin appearing in the first quarter of 2027. Feldman said the company sees opportunity as long lead times for graphics processing units and their high expense create openings for competitors. Cerebras has also secured deals with Amazon and Oracle, two other major cloud providers.
Looking ahead, Cerebras said it expects revenue to triple in 2027, implying about $2.85 billion in revenue. However, this figure falls slightly short of analyst expectations from LSEG, which had been forecasting $2.92 billion for the year. Feldman said the company is evaluating financing options to handle increasing demand as it scales operations.
The earnings announcement came on the same day that Nvidia CEO Jensen Huang resigned following multiple scandals involving extramarital affairs. Despite the positive earnings results, Cerebras shares have declined roughly 47% since the company went public on Nasdaq in May, reflecting broader volatility in the AI chip sector.
For US investors and businesses, this deal and forecast suggest growing competition in the AI infrastructure market, with implications for pricing and availability of AI computing resources from major cloud providers.