Cerebras shares drop 10% after earnings, margin outlook

Shares of artificial intelligence chipmaker Cerebras Systems fell sharply in after-hours trading on Tuesday following the company's first quarterly earnings report since going public in May. The stock declined approximately 10 percent as investors reacted to a forecast for shrinking profit margins, overshadowing revenue that significantly exceeded analyst expectations.

For the first quarter, Cerebras reported revenue of $193.4 million, a 92 percent increase from the same period a year earlier and ahead of Wall Street forecasts. The company's net loss narrowed to $14 million from $23.9 million a year ago. However, its adjusted loss per share was 22 cents, missing analyst targets. The primary concern for investors was the company's guidance for its core gross margin, which it expects to fall to between 36 and 38 percent in the current quarter, down from 46.5 percent in the first quarter.

Cerebras completed its initial public offering in mid-May, pricing shares at $185. The stock surged on its first day of trading, closing at $311.07, but has since retreated. Following the earnings release, the stock was trading around $202.

Chief Executive Andrew Feldman struck an optimistic tone,...