Cerebras Systems CEO Andrew Feldman said the company's narrower gross-margin outlook was being misunderstood after a sharp stock sell-off on Wednesday.
The reaction highlights the volatility of AI-chip valuations and the sensitivity of investors to profit margins, even when top-line growth remains strong.
Cerebras released its earnings report on June 23, 2026. While the company reported that revenue increased 92% from a year earlier [3], the stock price reacted negatively to guidance regarding the core AI-chip business. Feldman appeared on CNBC's "Squawk on the Street" and said the market misinterpreted the company's financial projections.
"Our gross-margin guidance was misinterpreted by the market," Feldman said.
The stock has faced significant pressure following the report. Shares are down 28% since the company's initial public offering [2]. Furthermore, the stock has fallen nearly 40% compared to its year-to-date high [1].
Feldman said the company forecast a narrower gross margin in its core business [2]. He said the specific nature of this forecast was the primary driver of the investor panic. "The margin outlook is heavily misunderstood," Feldman said.
This volatility comes as the AI sector faces increasing scrutiny over the long-term sustainability of high hardware costs and the timeline for return on investment. Despite the stock plunge, the company's revenue growth suggests a continuing demand for its specialized AI hardware architecture.
“"The margin outlook is heavily misunderstood."”
The disconnect between Cerebras' high revenue growth and its crashing stock price suggests that investors are shifting their focus from raw expansion to profit efficiency. By flagging a narrower gross margin, Cerebras signaled a potential increase in the cost of goods sold or a pricing adjustment that the market viewed as a red flag for future profitability, regardless of the CEO's claims of misinterpretation.
