Cerebras (CBRS) Doubled Core Revenue. Why Did GAAP Hardware Sales Fall 23%?

Cerebras Systems Inc. (NASDAQ:CBRS) reported record second-quarter core revenue of $209.9 million, up 103% from a year earlier. Core revenue is a company-defined non-GAAP measure that adds back customer-warrant amortization and excludes data-center pass-through revenue.

Core revenue exceeded management’s approximately $194 million guidance, but GAAP revenue increased 74% to $180.1 million, below the $194.23 million consensus compiled by LSEG.

The quarter also showed a sharp shift in Cerebras’s revenue mix. On a GAAP basis, cloud and other services revenue roughly quadrupled to $126 million, while hardware revenue declined 23% to $54.1 million. Core hardware revenue, however, rose 17% year over year to $82.1 million, reflecting the exclusion of non-cash customer-warrant amortization.

Core hardware revenue nevertheless declined 26% from $111.6 million in the preceding quarter, confirming that the revenue mix shifted sharply toward cloud services. Shares of Cerebras Systems Inc. (NASDAQ:CBRS) fell 11.9% to $231.01 on August 13 after dropping as much as 16% in extended trading following the report.

The quarter raises a broader question about how investors should value Cerebras as cloud services become a larger part of its hybrid hardware-and-cloud business.

BULL CASE: CUSTOMERS ARE BUYING CEREBRAS COMPUTE

The bull case for Cerebras Systems Inc. (NASDAQ:CBRS) is that customers want access to its computing capacity even when they do not purchase the hardware directly.

GAAP cloud and other services revenue at Cerebras Systems Inc. (NASDAQ:CBRS) rose 281% year over year. That growth suggests the company can monetize its wafer-scale processors through service-based and potentially recurring revenue rather than depending entirely on large, irregular system sales.

A multiyear, $20 billion-plus OpenAI agreement supports demand. Cerebras Systems Inc. (NASDAQ:CBRS) reported $25.4 billion of remaining performance obligations.

Cerebras Systems Inc. (NASDAQ:CBRS) also raised its 2026 core-revenue forecast to $880 million-$890 million from $855 million-$865 million.

BEAR CASE: DIRECT SYSTEM ADOPTION REMAINS THE QUESTION

Cerebras Systems Inc. (NASDAQ:CBRS) is widely viewed as an NVIDIA challenger, but its IPO prospectus already described a hybrid model combining on-premises hardware with cloud-based compute.

The sequential decline in hardware revenue makes the pace of direct system adoption a more important question, even though core hardware revenue remained above the year-earlier level. GAAP hardware revenue fell to $54.1 million, partly reflecting non-cash customer-warrant amortization. Core hardware revenue was $82.1 million, up 17% year over year but down 26% sequentially.

Cloud growth validates demand for Cerebras-powered compute, but the sequential hardware decline provides less evidence of accelerating adoption among customers purchasing systems outright.

Adjusted gross margin for Cerebras Systems Inc. (NASDAQ:CBRS) fell to 40.6% from 46.5% in the preceding quarter. Management attributed roughly five percentage points of margin pressure to temporarily renting back Cerebras systems previously sold to cloud customers.

The cloud model requires Cerebras to arrange data-center capacity, deploy systems, and commit capital before or alongside the revenue ramp. Compared with an outright hardware sale, it leaves Cerebras responsible for more of the infrastructure and execution burden, although customer financing, including OpenAI’s $1 billion working-capital loan, partially offsets that requirement.

NVIDIA still derives substantial revenue from systems deployed in customer-financed infrastructure, although it also participates in cloud operations and infrastructure-financing arrangements.

INSIDER MONKEY’S HEDGE FUND DATA

Insider Monkey’s database does not yet show a quarterly hedge-fund count for Cerebras Systems Inc. (NASDAQ:CBRS). Cerebras completed its IPO in May 2026, so there is no directly comparable public-company hedge-fund count for the preceding quarter.

IS CEREBRAS BECOMING AN AI-INFRASTRUCTURE PROVIDER?

The growth is real, but its source changes the valuation lens. The decline in GAAP hardware revenue and the sequential drop in core hardware revenue weaken the simplest version of the NVIDIA-disruption thesis, even though core hardware revenue remained higher year over year.

Cerebras’s revenue mix is moving toward cloud services, making it increasingly important to evaluate the company as a vertically integrated AI-infrastructure provider rather than solely as a merchant-hardware challenger.

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READ NEXT: ConocoPhillips (COP): Wall Street Sees More Upside Despite Leadership Shakeup and Here is Why Chevron (CVX) is a Favorite Among Hedge FundsDisclosure: None. This article is originally published at Insider Monkey.