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Cerebras' Robust First-Quarter Results, Potential Upside Catalysts to Drive High Expectations, Wedbush Says

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Cerebras' Robust First-Quarter Results, Potential Upside Catalysts to Drive High Expectations, Wedbush Says

Cerebras Systems (CBRS) reported better-than-expected first-quarter core revenue and margin, while there are various potential catalysts that could drive Wedbush Securities' expectations for the artificial intelligence chipmaker, it said in a Wednesday client note.

The company late Tuesday posted core revenue of $191.3 million for the quarter ended March, representing a year over year jump of 92%, topping the FactSet-polled consensus of $181.2 million. Core margin came in at 46.5%, compared with Wedbush's forecast of 44%.

Cerebras, which went public in May, anticipates core revenue of about $194 million for the ongoing three-month period and expects the metric to come in between $855 to $865 million for the 2026 full year. The Street is looking for sales of $182.5 million for the second quarter and $850.2 million for 2026.

The firm's results and outlook validated Wedbush's confidence that senior management will "look to handle earnings and guidance in a predictable manner including setting achievable/beatable targets," it said in the note. High prices of the firm's cloud service also signifies the value of the demand for its products and offerings, according to the brokerage.

The brokerage reiterated its outperform rating on Cerebras' stock and lifted its price target on the company to $280 from $270. The firm's shares fell 8.9% in the most recent premarket activity.

In March, Cerebras agreed a multi-year partnership with Amazon's (AMZN) Amazon Web Services to deliver the fastest AI inference service in cloud platforms. Earlier in the year, the company announced a multi-year deal with OpenAI worth more than $20 billion to deploy 750 megawatts of its high-speed inference compute over the next several years.

"We continue to see numerous potential catalysts ahead that could/ should drive upside to our expectations, while Cerebras's OpenAI and Amazon deals significantly limit any probability Cerebras disappoints," Wedbush analyst Matt Bryson wrote in the note.

Additionally, beyond the OpenAI and Amazon deals, the company's forthcoming products, incremental data center capacity and continued strong demand for AI all create potential upside to the brokerage's model.

Wedbush continues to believe 2028 will be the "appropriate" year to evaluate Cerebras as its financials begin to normalize following the initial ramp to support Open AI.

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