Artificial intelligence (AI) infrastructure firm Cerebras Systems (CBRS) is set to host its Supernova event on Aug. 18, after reporting its Q2 results on Aug.12, after the market closes. Prior to that, Wedbush analysts have taken a bullish stance on Cerebras, maintaining an “Outperform” rating and a $280 price target (indicating a 19.3% upside from current levels).
Analyst Matt Bryson believes the event is likely to be the venue for launching WSE-4, the newest iteration of its Wafer Scale Engine (WSE) specialized processor. This is expected to boost performance compared to the WSE-3, which could lift pricing and margins.
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Against this backdrop, we take a closer look at Cerebras…
About Cerebras Stock
Cerebras Systems develops AI infrastructure designed to make training and deploying large AI models faster and more efficient. Its portfolio includes rack-scale AI supercomputers powered by the WSE, a specialized processor built for generative AI workloads.
The company serves cloud providers, AI research organizations, businesses, and government agencies through on-premises systems and cloud-based access. Headquartered in Sunnyvale, California, Cerebras Systems has a market capitalization of $53.18 billion.
After its bumper Nasdaq debut in May, Cerebras’ stock has been hit with volatility, which has capped its gains. Over the past month, the company’s shares have gained 22.14%, while the stock climbed 22.59% over the past five days. It reached a month-high of $265.63 today, Aug. 12, and may have more room to run before the market closes.
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On a forward-adjusted basis, Cerebras’ stock is trading at a price-to-sales ratio of 61.52 times. This high valuation looks even more stretched when we compare it with the 3.42 times industry average.
Cerebras’ Notable Partnerships
Cerebras forged notable partnerships during the first quarter. It announced a more than $20 billion multi-year partnership with OpenAI to deploy 750 megawatts of its high-speed inference compute.
In addition, the company opened a multi-year relationship with AWS to bring fast inference, with AWS’ Trainium 3 handling prefill, while Cerebras CS-3 delivers ultra-fast inference during the decode phase.
In its Advancing AI event, Advanced Micro Devices (AMD) announced a partnership with Cerebras to create a disaggregated AI inference architecture that works in two distinct stages: AMD Helios handles prompt processing and large-context workloads at high throughput, while Cerebras’ specialized chips generate tokens with ultra-low latency and high memory bandwidth.
The company also entered a partnership with CrowdStrike Holdings (CRWD) to pair its AI inference speed with CrowdStrike’s proprietary Falcon AI Detection and Response (AIDR) platform. With AI deployments at scale, the bottleneck of AI-powered attacks looms large. The partnership targets this issue and aims to shorten the time between threat detection and response execution.
Notably, Matt Bryson sees the CrowdStrike and AMD ventures as less significant than the bumper deals from OpenAI and AWS, and the deals might not be incorporated into its initial guidance. This means the newer deals could provide further upside in future quarters.
Despite the solid tailwinds, Wall Street analysts are not that optimistic about Cerebras’ future earnings. For the current fiscal year, the company’s loss per share is projected to reach $0.89, followed by a 207.9% improvement to an earnings per share of $0.96 in the next fiscal year.
What Do Analysts Think About Cerebras’ Stock?
In addition to Wedbush’s bullish stance, other Wall Street analysts have also largely favored Cerebras. Mizuho analysts raised the stock’s price target in July from $300 to $310, while maintaining an “Outperform” rating. The firm reiterated its positive stance on Cerebras post its partnership announcement with AMD.
On the other hand, Freedom Capital initiated coverage of Cerebras with a “Hold” rating and a $209 price target. The firm’s analysts noted strong volatility in the stock following its Q1 earnings release. However, analysts also noted that this poses a great entry point in CBRS, despite some risks associated with its rapid expansion strategy.
In June, analysts at Rosenblatt reiterated a “Buy” rating and a $300 price target after the company’s previous quarterly result, as the company exceeded expectations, while raising guidance. The company is moving beyond hardware sales by fulfilling contracts through production deployments on Cerebras Cloud, with the transition advancing faster than anticipated.
The pure-play AI stock has become a major hit on Wall Street amid the AI boom, with analysts awarding it a consensus “Strong Buy” rating overall. Of the 11 analysts rating the stock, a majority of eight analysts have given it a “Strong Buy” rating, one analyst rated it “Moderate Buy,” while two analysts are taking the middle-of-the-road approach with a “Hold” rating. The consensus price target of $282 represents a 7.14% upside from current levels. Moreover, the Street-high price target of $325 indicates a 23.5% upside.
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On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
