Cerebras has increased its revenue guidance for the year to between $940m and $960m in core revenue, up from an August projection of $880m to $890m. The company's chief executive Andrew Feldman disclosed to CNBC that Microsoft, one of the world's top three cloud providers, inked a deal in October. Revenue stemming from the Microsoft partnership is anticipated to begin flowing in the first quarter of 2027.

The chipmaker's stock climbed roughly 17% in after-hours trading Thursday following the announcement of third-quarter results that surpassed analyst forecasts. The company also expanded its customer base in the cloud segment and raised its full-year outlook. Cerebras already maintains relationships with Amazon and Oracle, the latter planning to roll out Cerebras inference capabilities through its cloud infrastructure beginning in 2027.

A revenue beat and a wider loss

For the three-month period ending 30 September, core revenue increased 70% to $230.9m, exceeding the $214.7m consensus estimate from analysts tracked by LSEG. Under generally accepted accounting principles (GAAP), revenue grew 55% to $210.8m.

The cloud and services segment now represents the largest portion of Cerebras' business. This division saw revenue surge 265% to $141.9m, while hardware revenue declined to $68.9m compared with $96.8m in the prior-year quarter.

Using its adjusted measure, Cerebras posted a profit of $29.8m, surpassing analyst expectations for a $38.4m loss. However, under GAAP accounting, the net loss expanded significantly to $161.2m from $22.2m a year prior. Stock-based compensation of $155.1m accounted for the majority of this variance.

That progress energizes us to do even more as we push the limits of innovation and expect to triple revenue in 2027

Andrew Feldman

Looking ahead to the fourth quarter, Cerebras guided for core revenue between $310m and $330m, well above the $271m analysts had anticipated. Should the company achieve its stated goal of tripling revenue in 2027, it would reach approximately $2.85bn, slightly below the $2.92bn figure analysts have projected.

OpenAI and the capacity problem

A substantial portion of Cerebras' expansion trajectory depends on OpenAI. The compute arrangement with OpenAI underpins the company's $26.1bn in remaining performance obligations—the future revenue it has already contracted but not yet recognized.

Feldman told investors that OpenAI's business with Cerebras expanded from the second quarter onward. Nevertheless, Cerebras lacked sufficient capacity to support a comprehensive deployment of OpenAI's Ultrafast tier offering, he noted.

Capacity expansion is consuming significant capital. Cerebras has secured 700 megawatts of data centre capacity contracted for completion by the end of 2027, encompassing new facilities in Norway and Finland. During the first nine months of the year, the company spent $388.9m on operations and allocated $1.05bn toward property and equipment purchases. As of September, Cerebras held $7.8bn in cash and short-term investments.

Feldman indicated to CNBC that the company is evaluating various financing approaches to satisfy rising demand. During the analyst call, he emphasized that data centre availability represents a constraint affecting the entire industry, and suggested that shifts in US policy could complicate future infrastructure development.

As we look to the months ahead, we see two certainties: rapid change and compute shortages

Andrew Feldman

Chasing Nvidia

Cerebras' announcement coincided with Jensen Huang stepping down as Nvidia's chief executive. Feldman told CNBC that extended delivery timelines and escalating expenses for graphics processors present an opportunity for Cerebras to differentiate its proprietary hardware offerings.

Despite Thursday's gains, Cerebras shares remain substantially lower than their May debut price on the public markets. The stock has declined approximately 47% since its initial listing.

Cerebras unveiled the CS-4 system in August and plans to begin shipping the CS-5 in early summer 2027. The company stated that its Wafer Scale Engine 5 processor, which powers the CS-5, is undergoing system-level testing.

Source: The Next Web