Cerebras Systems (CBRS) reported relative upside to initial expectations, and although there were no surprises, several potential future catalysts could drive further upside, Wedbush Securities said in a note Wednesday.
The company reported modest upside to revenue and margins, driven by hardware sales exceeding the investment firm's expectations and higher cloud service pricing due to strong demand, according to the note.
The upside seems to carry into Q2 guidance, with revenue outperforming Wedbush's estimate by a similar magnitude. While gross margins are expected to contract as OpenAI revenue ramps up, the decline is less pronounced than the brokerage had previously modeled, creating upside through 2026, the note added.
Wedbush believes new products with improved performance, higher prices and margins, additional data center capacity, and strong demand for AI products could provide potential upside to its model, according to the note.
Wedbush kept an outperform rating on Cerebras and raised the price target to $280 from $270.
Shares of Cerebras were down 16% in Wednesday trading.
Price: $189.63, Change: $-37.09, Percent Change: -16.36%