Cerebras Jumps 11% on Microsoft Cloud Deal and Surprise Adjusted Profit

Shares of Cerebras Systems rose 11.2% on Friday to finish at $108.72 after the semiconductor maker raised its annual revenue forecast, posted record third-quarter results, and disclosed a cloud infrastructure agreement with Microsoft.

The transaction brings another primary hyperscaler into Cerebras's commercial pipeline, expanding on existing engagements with Amazon Web Services and Oracle Cloud Infrastructure. Market analysis published by Yahoo Finance (https://finance.yahoo.com/video/cerebras-stock-surges-on-microsoft-deal-what-it-means-for-nvidia-213123807.html?.tsrc=rss) emphasized that the agreement reflects a concerted effort across cloud operators and frontier artificial intelligence labs to diversify compute architectures away from Nvidia's graphics processors and proprietary CUDA software stack.

For the quarter ended September 30, the Sunnyvale, California-based company booked record GAAP revenue of $210.8 million, up 55% from $135.7 million in the third quarter of 2025. Core revenue—a non-GAAP figure that excludes data center pass-through costs and adds back non-cash customer warrant amortization—grew 70% year over year to $230.9 million.

Top-line expansion was driven entirely by cloud infrastructure services, where customers query models through application programming interfaces rather than deploying on-premises server racks. GAAP cloud and services revenue increased 265% year over year to $141.9 million, offsetting a 29% decline in direct hardware sales to $68.9 million.

Substantial equity expenses tied to the company's initial public offering earlier in the year weighed on bottom-line GAAP results. Third-quarter operating expenses reached $266.2 million, including $155.1 million in stock-based compensation, producing a GAAP net loss of $161.2 million, or $0.67 per share. On an adjusted basis, however, Cerebras generated its first profitable period as a public entity, recording core net income of $29.8 million against a core net loss of $10.9 million a year earlier.

Cerebras builds its systems around its proprietary Wafer Scale Engine, an outsized single-wafer processor engineered to bypass inter-chip networking delays that limit conventional GPU clusters. Originally adopted primarily by national laboratories for scientific computing, the hardware has increasingly found commercial traction in high-speed, low-latency AI inference workloads.

Following the quarterly results, management lifted its full-year 2026 core revenue outlook to between $940 million and $960 million, up from its earlier guidance of $880 million to $890 million. Fourth-quarter core revenue is projected at $310 million to $330 million, with core gross margin guided to 47% to 49%. Chief Executive Officer Andrew Feldman reiterated on the company's investor call that revenue is expected to triple in 2027.

Despite the commercial expansion, physical bottlenecks continue to pace deployments. Cerebras reported $7.8 billion in total cash, restricted cash, and short-term investments, alongside $26.1 billion in remaining performance obligations. However, Feldman noted in broadcast interviews that data center facility handovers remain behind schedule, creating execution pressure as the company works to scale contracted capacity across North America and Europe.

Cerebras stated that it will disclose formal integration milestones for its Microsoft and Oracle deployments next year, alongside volume manufacturing for its CS-4 system and preparation for its next-generation CS-5 architecture scheduled for summer 2027.