**What happened: **Cerebras Systems (CBRS) stock fell 17% in premarket trading on Thursday after the AI chipmaker's Q2 results and Q3 outlook failed to impress investors a day earlier.
What's behind the move: Cerebras swung to a loss of $2.98 per share in Q2 from a profit of $1.91 per share in the year-earlier period. The company reported a second quarter core gross margin of 40.6%, noting on the call that the metric would have been 500 basis points higher and more similar to Q1's core gross margin of 46.5% if not for its decision to temporarily rent some of its own systems back from cloud customers to meet demand for inference services.
CFO Bob Komin said on the company earnings call that Cerebras expects Q3 to be "the low point" for core gross margin before significant improvement in Q4.
The maker of AI processors forecast third quarter core revenue of $214 million to $216 million, topping Wall Street's consensus estimate of roughly $210 million. However, some analysts had estimates as high as $220 million, according to Bloomberg data. The company expects core revenue of $880 to $890 million for the fiscal year.
Cerebras forecast core gross margin in the range of 38% to 40% for Q3 and 41% to 43% for full-year 2026.
The company's third quarter and fiscal 2026 outlook was "only modestly above expectations … which may temper the positive earnings read-through," Bloomberg Intelligence analyst Kunjan Sobhani said.
**What else you need to know: **Cerebras has been transitioning from selling hardware directly toward deploying its proprietary technology into its cloud business. Hardware revenue last quarter declined 23% year over year, while the company's cloud business nearly quadrupled to $127.7 million.
Cerebras Systems went public in May in a highly anticipated IPO. The company, whose wafer-scale processors are designed to accelerate AI workloads, seeks to compete with AI chip heavyweight Nvidia (NVDA).
Cerebras has established partnerships across the AI industry, including collaborations with Amazon (AMZN) and OpenAI (OPAI.PVT). Earlier this year, OpenAI launched its first AI model running on Cerebras chips.
Cerebras is set to hold its Supernova event on Aug. 18, where analysts expect the company to unveil its next-generation Wafer Scale Engine, its giant AI processor.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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