Cerebras jumps about 17% to 19% before the bell after adding Microsoft as its third cloud giant and raising its forecast

While Nvidia's leadership change has dominated the chip conversation all week, a smaller rival is getting the premarket spotlight. Cerebras Systems shares were up sharply before Friday's open after the AI chipmaker reported quarterly results that beat on revenue, raised its outlook and disclosed a new agreement with Microsoft.

The move

Benzinga had Cerebras up 19.39% at $116.70 in early premarket trading, and Investing.com reported a 19.2% gain to $116.54. Later Benzinga and market scanners showed the gain closer to 17%, so the size of the move has been shifting in thin early trading. CNBC reported the stock jumped about 17% in extended trading on Thursday evening, right after the report.

The bounce comes from a low base. CNBC noted the stock had lost almost half its value since the company's initial public offering in May.

What the company reported

Cerebras said third-quarter core revenue rose 70% from a year earlier to $230.9 million, up from $135.7 million, ahead of the $214.7 million that analysts surveyed by LSEG expected, according to CNBC. On an adjusted basis the company earned 12 cents a share, compared with an expected loss of 14 cents, CNBC reported, and management said on the call it delivered positive non-GAAP net income for the first time as a public company. On a standard accounting basis it still posted a per-share loss that was wider than estimates, Benzinga noted, which is why some headlines described the quarter as a miss.

The bigger driver was guidance. For the fourth quarter, Cerebras forecast revenue of $310 million to $330 million and a core gross margin of 47% to 49%. Analysts polled by LSEG were looking for $271 million and a 42.1% margin, according to CNBC and other outlets that cited the same consensus. The company also raised its full-year 2026 core revenue forecast to $940 million to $960 million, according to Benzinga and a MarketBeat summary of the call.

Cerebras repeated that it expects revenue to triple in 2027. CNBC calculated that this implies about $2.85 billion, slightly below the $2.92 billion analysts surveyed by LSEG had expected for that year.

The Microsoft piece

Chief executive Andrew Feldman told CNBC that Microsoft signed a cloud agreement with Cerebras in October, and that "we believe revenue begins to show up in Q1 '27." On the earnings call, Feldman said the deal makes Microsoft the third hyperscaler, after Amazon Web Services and Oracle, to use the Cerebras platform as part of its inference strategy. Inference is the work of running AI models once they are trained, the part of the market that grows as more people and businesses use AI tools every day.

"I think there is opportunity created by, particularly on the hardware side, the sale of hardware, where long lead times in GPUs and more expense creates opportunity for us." - Andrew Feldman, Cerebras CEO, to CNBC

Feldman's point is a direct reference to the graphics processors that Nvidia dominates. When those chips are scarce or expensive, buyers look at alternatives, and Cerebras is pitching itself as one of them.

The caveats from the call

Not everything was smooth. According to a MarketBeat summary of the call, Feldman said Cerebras had fallen behind on initial capacity deliveries under its agreement with OpenAI and did not have enough capacity for a broad rollout of one OpenAI offering, blaming land, power and data center construction rather than chips. Under that agreement, long delays give either side the option to cancel the affected portion; Feldman said no delayed capacity had been canceled at the time of the call. Feldman also told CNBC the company is evaluating its financing options to keep up with demand.

Why it matters this week

The report lands in the middle of a week in which investors have been asking how much of the AI buildout depends on one company and one leader. Thursday's trading showed money moving toward Nvidia competitors such as AMD and Broadcom, and Cerebras' guidance gives the market another data point on demand for alternative AI hardware. It is still a much smaller business: its full-year revenue forecast is under $1 billion, a fraction of what the largest chipmakers report in a single quarter.

What to watch

The regular session will show whether the premarket gain holds once full volume arrives. Cerebras said it expects to share more about the Microsoft agreement in the first half of 2027, according to the MarketBeat call summary. Across the sector, Nvidia's results on Tuesday, Nov. 17, are the next major test for AI chip demand.