Cerebras Systems tops Q3 revenue estimates, adds Microsoft cloud deal
AI chip challenger Cerebras Systems is expanding its cloud customer base as it posts stronger-than-expected third-quarter revenue and outlook. The company says a newly signed Microsoft agreement is expected to start contributing revenue in the first quarter of 2027, adding to existing ties with Amazon and Oracle.
Highlights
- Cerebras Systems reports Q3 core revenue of $230.9 million, beating the $214.7 million LSEG consensus, with shares up 11% after-hours.
- Cerebras announces a new Microsoft cloud deal, revenue to begin in Q1 2027, and guides Q4 revenue of $310 million–$330 million, topping analyst expectations.
- The company expects 2027 revenue to triple to approximately $2.85 billion as it intensifies competition with Nvidia in the AI chip sector.
Quarterly performance and new cloud partnership
As reported by CNBC, Cerebras Systems reports core revenue of $230.9 million for the third quarter, above the $214.7 million expected by analysts surveyed by LSEG, while its stock jumps 11% in extended trading.The company says core revenue grows 70% from $135.7 million, compared with 103% growth in the second quarter. Loss per share is 67 cents, although it is not immediately clear how that compares with the 14-cent loss expected.
Chief Executive Andrew Feldman says on an interview that executives will announce a new relationship with Microsoft on a conference call with analysts starting at 5 p.m. ET. Feldman says Microsoft signed the deal in October and that revenue from the agreement begins to show up in the first quarter of 2027.
Cerebras has also landed agreements with other major cloud providers Amazon and Oracle. Feldman says the company is evaluating financing options to meet rising demand, particularly as long lead times and higher costs for GPUs create an opening for its hardware products.
Outlook and competitive pressures in AI chips
For the fourth quarter, Cerebras expects a core gross margin of 47% to 49% and revenue of $310 million to $330 million. That is above LSEG analyst expectations for a 42.1% margin and $271 million in revenue.Cerebras also says it expects revenue to triple in 2027, implying about $2.85 billion, compared with the $2.92 billion analysts surveyed by LSEG were expecting. The company is seeking to challenge Nvidia in the AI chip market as it scales commercial demand through cloud partnerships.
Cerebras shares have fallen about 47% since the company debuted on Nasdaq in May. Its earnings are released on the same day Nvidia CEO Jensen Huang resigns from the company he co-founded after multiple scandals involving extramarital affairs.
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