Cerebras shares continued to decline overnight despite holding a $20 billion contract with OpenAI, as analysts warn that customer concentration risks have merely shifted rather than resolved.
Cerebras Systems’ stock tumbled more than 11% in overnight trading on Tuesday following the chipmaker’s first quarterly report since its initial public offering last month. Although revenue nearly doubled and surpassed expectations, the company reported an adjusted loss wider than analysts had targeted. First-quarter revenue rose 94% to $193.4 million, beating the $181.2 million estimate from FactSet. Hardware revenue increased 59% to $110.6 million, while revenue from cloud and other services nearly tripled to $82.8 million. However, the adjusted loss came in at $0.22 per share, missing the $0.16 per-share target.
During the update, Cerebras highlighted its January-announced supply agreement with OpenAI, valuing the deal at $20 billion. Under the contract, the ChatGPT developer has committed to purchasing 750 megawatts of ultra-low-latency AI compute capacity, which will be delivered in multiple tranches through 2028. The company continues to operate the Cerebras Inference Cloud, a platform where customers rent AI compute powered by Cerebras chips. This development carries particular weight for investors as the firm works to expand its client roster and mitigate concerns regarding heavy reliance on a narrow set of buyers.
According to the firm’s IPO filing, UAE-affiliated customers—including G42 and the Mohamed bin Zayed University of Artificial Intelligence—accounted for approximately 86% of Cerebras’ revenue last year. Despite the new OpenAI partnership, analysts warn that underlying risks persist. “Concentration did not go away; it rotated,” said Patrick Moorhead, chief analyst at Moor Insights. In a post on X, Moorhead noted, “The answer is a $20B-plus, 750MW commitment to one customer, OpenAI, who also lent Cerebras $1B and gets paid partly in warrants. Trading G42 risk for OpenAI risk could be looked at as a bigger single point of failure, not diversification, and most of the $24.6B backlog is that one contract.” He further emphasized that margin pressure likely drove the recent sell-off: “The wafer-scale technology is real and genuinely differentiated on speed. The margin path, the cash burn, and the concentration are the questions that matter now.”
Amid the volatility, Cathie Wood’s ARK Investment Management increased its position, acquiring an additional $5.8 million lot of CBRS shares on Tuesday. Cerebras raised roughly $5.6 billion during its May IPO, driven by strong investor appetite for its flagship Wafer-Scale Engine chip, which is purpose-built for large AI models. As of the previous market close, CBRS shares remained 23% above their IPO price.
Retail trader sentiment on Stocktwits shifted sharply to “extremely bullish” on Tuesday night, reversing from a “bearish” stance the prior day, accompanied by a more than 1,800% surge in 24-hour message volume. One trader commented, “$CBRS I waited for the price to come down and it did. ER was fine. I'm buying and holding.” Others expressed caution regarding the valuation and deal structure. “The only reason OpenAI was secured as a major future customer was by enticing them with penny warrants. Already on Day 1 as the company trades at $360/sh, those warrants are already worth $12B to OpenAI relative to the $20B+ in purchase commitments they made to Cerebras,” one user wrote. Another added, “Sure it's a great technology and company but sorry if I'm a bit skeptical on this 200x sales valuation for a company that hasn't demonstrated any real arms-length commercial viability for its products.”
Market participants are closely monitoring the stock as the lock-up period begins to expire. Approximately 13% of the IPO shares become eligible for sale by insiders and early investors on Thursday, according to Barron’s. A second tranche, representing another 17% of shares, will become tradable two days after the company reports its second-quarter earnings.