Shares of artificial intelligence chip company Cerebras Systems have plummeted more than 25% over two days following a disappointing earnings outlook.
On Thursday, the stock continued its sharp decline, dropping as much as 12% intraday to its lowest level since its market debut in May, before closing down 7.6%.
This followed a session where the share price fell below its initial public offering price for the first time, recording its largest single-day drop of 20%.
The sell-off was triggered by investor disappointment with the company's full-year forecast. Cerebras projected its core gross margin for the second quarter would narrow significantly to a range of 36% to 38%, down from 46.5% in the first quarter. For the full year, it expects a core operating margin between negative 28% and negative 32%.
The consecutive declines have wiped out nearly 50% of the stock's value from its all-time closing high of $311 reached on its first trading day, erasing approximately $30 billion in market capitalization. Cerebras was the largest IPO of 2026 at the time of its listing, a title later claimed by SpaceX.
Based in Sunnyvale, California, Cerebras designs AI chips and operates AI data centers, positioning itself as a competitor to Nvidia. As the AI boom continues, investors have placed high hopes on the company, becoming accustomed to the sector frequently delivering results that exceed expectations.
Although Cerebras forecast fiscal 2026 revenue between $855 million and $865 million, surpassing the average analyst estimate of around $825 million, this guidance still failed to meet the market's lofty expectations. Investors had hoped the company would capture a larger share of the rapidly growing AI data center market.
The company reported its earnings after the market closed on Tuesday, entering an environment where the broader chip sector was already experiencing widespread selling. This followed a rapid rally and was driven by concerns over a potential slowdown in future demand.
On Thursday, the U.S. semiconductor sector experienced significant volatility. Sentiment was initially lifted by a strong earnings report from Micron Technology, but the market turned choppy again after news that DeepSeek plans a major hiring expansion across all its divisions.
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