Cerebras Systems (CBRS) shares tumbled 16.51% in post-market trading, completely reversing an intraday rally of over 11% ahead of the company's second-quarter earnings release. The sharp sell-off came after the AI chipmaker reported headline financial results that fell short of Wall Street expectations, triggering a wave of profit-taking despite an otherwise upbeat outlook.

The company posted GAAP revenue of $180.1 million for the quarter, up 74% year-over-year but missing the analyst consensus estimate of approximately $194.2 million. More significantly, Cerebras reported a GAAP loss of $2.98 per share, far wider than the expected loss of $1.41 to $1.62 per share, driven by a steep drop in GAAP gross margin to 14% and a surge in stock-based compensation expenses that ballooned to over $377 million in the quarter. Hardware revenue declined to $54.1 million from $70.3 million a year ago, while cloud and services revenue nearly quadrupled to $126 million.

Management emphasized that core non-GAAP metrics painted a more favorable picture, with core revenue more than doubling to $210 million and core gross margin improving to 41%. The company also raised its full-year core revenue guidance to $880–$890 million, up from $855–$865 million, and projected more than tripling revenue in 2027. The CFO noted that adjusted gross margin would have been roughly 500 basis points higher if not for higher costs incurred from renting back systems to expand cloud capacity. However, the wide gap between GAAP losses and core profitability, combined with the top-line revenue miss, proved too much for investors who had bid the stock sharply higher during the regular session.