Artificial intelligence (AI) hardware and infrastructure company Cerebras Systems (CBRS) is gearing up to report its fiscal 2026 third-quarter results on Thursday, Nov. 12, after the closing bell. But with the stock taking a beating over the past month, investor confidence appears far from reassuring as the company heads into earnings. Yet, Wall Street may have reasons to remain optimistic. Wedbush analyst Matt Bryson expects Cerebras to deliver another earnings beat and raise its forward guidance.
While reiterating an “Outperform” rating, Bryson lowered his price target to $190 from $290, pointing to a broader valuation reset across semiconductor and hardware stocks. According to Wedbush, mounting concerns over data center spending have put pressure on Cerebras shares, while investors are also questioning the longevity of its wafer-scale engine (WSE) chips, the status of its agreement with OpenAI, and the demand outlook for its high-speed inference technology.
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However, the brokerage believes many of these concerns are either misplaced or lack sufficient evidence to justify the market’s pessimism. More importantly, despite slashing its price target by a hefty $100, Wedbush still sees considerable upside in the stock. Its revised target of $190 implies approximately 96.5% upside from current levels. So, with Wedbush slashing its price target by $100 yet maintaining its bullish “Outperform” rating, and its revised target still pointing to substantial upside, how should investors approach CBRS stock now?
About Cerebras Stock
Founded in 2015, Cerebras Systems is a California-based AI infrastructure company that designs and develops high-performance computing systems to accelerate AI model training and inference. The company aims to make AI computing faster, more accessible, and energy-efficient through its proprietary wafer-scale chip technology. At the heart of its technology is the Wafer-Scale Engine (WSE), a processor built on an entire silicon wafer rather than conventional smaller chips.
By integrating computing cores, memory, and high-speed communication on a single processor, Cerebras seeks to overcome the performance and scalability limitations of traditional GPU-based infrastructure. Today, Cerebras positions itself as the world’s fastest AI inference and training platform, serving organizations across diverse fields, including medical research, cryptography, energy, and agentic AI.
Currently commanding a market capitalization of approximately $22.97 billion, Cerebras made its Wall Street debut in May this year. However, its journey as a publicly traded company has been anything but smooth. The stock has come under intense selling pressure, plunging over 57% over the past three months and another 40% in the last month alone. The selloff looks even more striking against the broader market backdrop, with the S&P 500 Index ($SPX) slipping just 2.8% over the past three months and 3.6% over the past month.
A combination of headwinds has rattled investor confidence, including an analyst price-target downgrade, a short-seller attack questioning the longevity of Cerebras’ chips, substantial post-IPO insider share sales, and a broader valuation compression across the semiconductor and AI hardware sectors. Together, these pressures have turned what was once a high-profile AI stock into a particularly volatile Wall Street bet.
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Inside Cerebras’ Q2 Earnings Report
While investor sentiment toward Cerebras remains under pressure, the company’s financial performance tells a considerably more encouraging story. In its fiscal 2026 second-quarter earnings report, released on Aug. 12, Cerebras delivered explosive revenue growth, fueled by surging demand for its AI-focused, high-speed inference cloud infrastructure. Total core revenue soared 103% year-over-year (YoY) to $209.9 million, comfortably surpassing Wall Street’s consensus estimate of $180.1 million.
The stellar growth was driven primarily by its private cloud and services segment, which skyrocketed 287% from the year-ago period to $127.7 million. Meanwhile, core hardware revenue contributed another $82.1 million, highlighting robust demand across the company’s AI computing portfolio. Beyond its impressive revenue growth, Cerebras also made significant commercial strides and deepened its position within the AI ecosystem.
Management pointed to strong adoption across AI coding workloads while highlighting high-profile collaborations, including its role in supporting OpenAI’s frontier model and the establishment of disaggregated inference partnerships with Amazon (AMZN) Web Services (AWS) and AMD (AMD). The company further expanded its contracted data center capacity footprint to approximately 600 megawatts (MW), while reporting an enormous $25.4 billion in remaining performance obligations (RPO) as of June 30, 2026, underscoring the scale of its contracted business pipeline.
Cerebras also made meaningful progress on the profitability front, with margins improving considerably despite the capital-intensive nature of expanding AI infrastructure. Core gross margin climbed to 41%, representing an improvement of approximately 940 basis points from the second quarter of fiscal 2025. Core operating margin also strengthened by roughly 2,600 basis points, although it remained negative at 16%.
Meanwhile, the company exited the quarter with a significantly strengthened balance sheet and substantial liquidity, supported in large part by its initial public offering (IPO), which was completed during the period. In fact, Cerebras reported approximately $8.6 billion in total liquidity, comprising cash, cash equivalents, restricted cash, and short-term investments, alongside an active $850 million revolving credit facility.
This substantial financial cushion gives the company considerable flexibility to ramp up operations, expand manufacturing capacity by more than tenfold over the course of 2026, and capitalize on relentless demand for low-latency AI inference. Looking ahead to its upcoming fiscal 2026 third-quarter earnings report, management expects core revenue to come in between $214 million and $216 million, while forecasting core gross margin in the range of 38% to 40%.
How Do Analysts View CBRS Stock?
Cerebras grabbed Wall Street’s attention on Monday after Wedbush slashed its price target to $190 from $290 ahead of the company’s upcoming earnings report. However, the brokerage isn’t backing away from its bullish stance, maintaining an “Outperform” rating and arguing that much of the recent pessimism surrounding the stock may be misplaced. While concerns over data center spending have undoubtedly weighed on shares, analyst Matt Bryson believes several other bearish arguments lack solid evidence.
These include claims that Cerebras’ WSE chips have a limited lifespan, that the company is overstating server longevity through its depreciation practices, that OpenAI has walked away from an option to deploy an additional 1.25 gigawatts of Cerebras capacity, and that demand for its chips and fast-inference technology may not be as strong as anticipated. Taking a closer look at these concerns, Bryson said he has found no evidence that Cerebras’ WSE chips are wearing out prematurely or that its depreciation schedules are artificially boosting reported profits.
He also dismissed speculation surrounding OpenAI, arguing that it is unlikely the AI giant would make infrastructure decisions today that could affect its requirements as far out as 2030. Although Wedbush acknowledges that the long-term value of fast-inference tokens remains uncertain, Bryson believes Cerebras’ pricing looks attractive relative to the data center capacity it provides. Even if OpenAI accounts for most of the cloud revenue Wedbush expects through 2028, the analyst sees little reason for immediate concern.
More importantly, with a significant portion of its projected business backed by OpenAI commitments, Wedbush believes Cerebras’ base-case sales outlook is relatively well insulated from funding-related concerns through at least 2028 and potentially as far out as 2030. Despite mounting investor skepticism and the recent selloff, Cerebras continues to enjoy strong backing from Wall Street, with the stock carrying a consensus “Strong Buy” rating.
Of the 11 analysts covering the stock, nine recommend a “Strong Buy,” one assigns a “Moderate Buy,” and just one has a “Hold” rating. The bullish sentiment is reflected in analysts’ price targets, too. The average target of $259.73 points to a potential upside of approximately 169% from current levels, while the Street-high target of $325 suggests a staggering 236% upside. Clearly, Wall Street sees plenty of room for a rebound, even as investors remain cautious about the stock’s near-term prospects.
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On the date of publication, Anushka Mukherji did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
