IB Net Payout Yields Model

Invest like me - only at Covestor.com

Cerebras: Forgotten AI Chip Stock

By -

Update - Oct. 8, 2026 

Cerebras plummeted mid-day as confusing information surfaced regarding the revenue reported by key client OpenAI. Prior reports had suggested that ARR jumped to $70 billion despite sites like TickerTrends suggesting ARR was actually around $50 billion. 

Now the market is viewing OpenAI revenue as slipping by $20 billion, but the reality is such a discrepancy in whether a site is reporting the gross ARR that includes payments to partners (Microsoft, AWS) or the new ARR. The financial picture of OpenAI isn't different. 

Cerebras fell all the way to $161 on the news despite no impact to the $20+ billion deal with OpenAI. Apparently, the AI lab is already up to $55 billion in net ARR. The stock had fallen over $40 from the SemiAnalysis headlines to the OpenAI ARR drama, yet business is full-speed ahead. 

Finviz Chart

Original article posed on Sept. 30

  • Cerebras Systems is undervalued amid confusing financials, despite massive AI market tailwinds and a $25B RPO, primarily from OpenAI.
  • The AI chip company expects a near 10x revenue increase by 2028, driven by hyperscaler partnerships and rapid AI inferencing adoption.
  • Gross margins are currently suppressed by cloud ramp-up costs, but management targets a move to 60%+ margins as scale and direct chip sales grow.
  • The stock trades at only 8.5x '28 revenue targets, relatively low for 200% growth.
Cerebras Systems, Inc. (CBRS) went from a hot IPO to an underperforming AI chip stock in the midst of a booming AI market. In fact, the excitement around AI personal assistants should drive inference demand for their wafer-scale chips, but the stock lacks momentum now. My investment thesis remains Bullish on the stock as the market overlooks the massive opportunity after confusing quarterly results.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Comments

Post a Comment

Popular posts from this blog

Stat of the Day: VXO hits 45 again

By -
Not hardly a week removed from hitting 45 on 9/18/08 and the market is back to this extreme level. Usually hitting the 40 level has historically been a huge buy signal for at least the next 4-6 months. Below are the times that 40 has been hit and only 2 times did it exceed 45 in the prior 20+ years until this month. Guess time will tell if this one leads to a huge rally. Date High 10/19/1987 152.48 8/24/1990 40.01 10/27/1997 40.04 8/27/1998 41.46 4/14/2000 41.53 3/22/2001 41.99 9/17/2001 47.7 7/11/2002 41.64 9/18/2008 45.81
Read more

Snap: Exclusive Engagement Isn't Enough

By -
New report shows Snap has an exclusive user base. Snap must prove the business model though plenty of revenue upside exists with monetizing existing user base. Valuation is extremely stretched despite the opportunity to grow revenues due to unconstrained operating expenses. A new report backs the thesis that  Snap  ( SNAP ) has compelling user engagement that remains sticky. Unfortunately, user engagement is only one part of an investable business model that  my research  has questioned since the IPO. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please review the disclaimer page for more details. 
Read more

Aurora Cannabis: Deal Or No Deal

By -
Aurora Cannabis was left out of the major deal making in 2018. The cannabis company updated FQ2 guidance to revenues of $50 to $55 million with a continued focus on pure production growth. The stock is down as the market is becoming less impressed with commodity farming operations due to the prime Oregon example. The stock is below key resistance at $5.40 as medical cannabis patient totals failed to impress. As the end of 2018 came and went,   Aurora Cannabis   ( ACB ) was a notable absentee from the deal making in the cannabis market. Just about all of the other major Canadian cannabis players got large investments or signed up powerful partnerships, but the related stocks didn't generally maintain rallies following the deals. Based on the early legalization data in Canada and Oregon, the best option for Aurora Cannabis might actually be selling production capacity while the Canadian market remains hot. Read the full article on Seeking Alpha.  Disc...
Read more