By Elena Vasquez

Cerebras shares rose about 16% in extended trading after the company beat earnings expectations and secured a cloud agreement with Microsoft, a top-three hyperscaler, according to CNBC.

What did Cerebras report?

Cerebras’ core revenue topped the $214.7 million analysts expected, while adjusted earnings reached 12 cents a share against an expected loss of 14 cents, CNBC reported. The adjusted result produced a 26-cent positive swing from consensus.

• Under generally accepted accounting principles, total revenue rose 55% to $210.8 million, CNBC reported.
• The net loss widened to $161.2 million, or 67 cents per share, from $22.2 million, or 41 cents per share, in the year-ago period, according to CNBC.
• Core revenue generated by cloud and other services climbed 272% to $144.9 million, CNBC reported.
• Core hardware revenue fell to $86.0 million from $96.8 million a year earlier, according to CNBC.

The cloud business generated $58.9 million more than hardware, even as core hardware revenue declined $10.8 million from the prior-year level. The $139 million increase in GAAP net loss offset revenue growth and the stronger cloud contribution at the bottom line.

How strong is Cerebras’ outlook?

• For the fourth quarter, Cerebras forecasts core revenue of $310 million to $330 million and a core gross margin of 47% to 49%; analysts polled by LSEG expected $271 million in revenue, according to CNBC.
• For the full year, the company expects core revenue of $940 million to $960 million and a core gross margin of 42% to 44%, compared with previous guidance of $880 million to $890 million in core revenue.
• Cerebras also expects to triple revenue in 2027.

The new full-year guidance midpoint of $950 million stands $65 million, or 7.3%, above the previous $885 million midpoint. The fourth-quarter midpoint of $320 million is $49 million, or about 18%, above the LSEG consensus of $271 million.

What does the Microsoft agreement mean for revenue?

Cerebras announced the cloud agreement with a top-three hyperscaler without naming the customer in its release. CEO Andrew Feldman told CNBC that Microsoft signed the deal in October, a disclosure made roughly three months before the expected revenue contribution.

Feldman said: “We believe revenue begins to show up in Q1 '27.”

Financial terms were not disclosed, according to The Wall Street Journal.

The agreement places future Microsoft revenue in cloud and other services, which grew 272% to $144.9 million, rather than hardware, where core sales fell to $86.0 million. The scheduled 2027 contribution gives Cerebras a larger cloud customer base before its stated goal of tripling revenue that year.

What risk remains after the OpenAI setback?

Shares had earlier touched their weakest level since Cerebras’ Nasdaq debut after reports that OpenAI selected Nvidia graphics processing units rather than Cerebras chips to run the “Ultrafast” mode in GPT-6.1 Sol.

That deployment setback came alongside Cerebras’ $10 billion agreement with OpenAI, struck in January to deliver 750 megawatts of computing capacity over a period ending in 2028. The contract remains far larger in stated value than the undisclosed Microsoft arrangement, but the Nvidia selection created immediate concern about how quickly Cerebras hardware would enter OpenAI workloads.

The 16% after-hours gain makes cloud execution and the Microsoft ramp the central tests for Cerebras, while the $161.2 million GAAP loss and OpenAI deployment risk remain material.