Key Takeaways
- Cerebras stock fell 11% in the past week to a new 52-week low, 75% below its May high.
- Oracle will offer Cerebras’ inference on its cloud, but a short seller and Oracle’s $20 billion raise outweighed the deal.
- The main risk is Culper Research’s claim that Cerebras’ wafers break down after about two years, which Cerebras hasn’t answered.
- UBS cut its target to $250 but kept its Buy, and the Nov. 12 report is the next test.
Cerebras Systems (CBRS) stock is down 11% in the past week. It closed Monday at a new 52-week low, 75% below its May 14 high.
That happened even though the business got good news: on Oct. 27, Cerebras and Oracle (ORCL) said Oracle Cloud Infrastructure will offer Cerebras’ fast inference. A short seller and Oracle’s own funding needs did the damage.
Oracle opened a new door
Oracle said that day it’s expanding its Nvidia chip deals while adding rivals such as Google and Cerebras. So Cerebras now sits on a major AI cloud beside the incumbent, as analysts expect its revenue to more than triple next year:
A short seller’s two-year claim
The next day, Culper Research said on X it’s short the stock, and that “$CBRS wafers break down after just ~2 years in use – a lifespan that undermines the entire business.”
If that’s true, customers would replace Cerebras hardware sooner than planned, raising what each year of computing costs them.
Culper’s figure is unproven so far. But Cerebras hasn’t answered it publicly.
Its new partner’s $20 billion raise
Cerebras had no news of its own on Monday. Oracle filed before the open to raise $20 billion in stock and bonds for its AI buildout. Oracle fell 9%, and AI infrastructure stocks fell with it.
Cerebras’ newest sales channel depends on that buildout.
TIKR tracks 11 analysts on Cerebras Systems. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Cerebras Systems, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Cerebras Systems’ Analyst Ratings
The Street hasn’t budged
That morning, UBS analyst Timothy Arcuri cut his target to $250 from $330 and kept his Buy. That’s 159% above Monday’s close.
At $250, the stock would trade at around 41x forward sales. At Monday’s close it traded at 16x, its lowest since listing and less than half its 36x average:
The consensus target from 11 analysts has barely moved, from $294 in June to $275 now:
What the report has to show
Cerebras reports third-quarter results after the close on Thursday, Nov. 12. It needs to answer Culper on wafer life, show early Oracle demand, and keep next year’s estimates in reach.
The way I see it, the stock has fallen further than this week’s business news justifies. But I’d wait for Nov. 12: until Cerebras answers Culper, I’m not willing to pay up for the rebound UBS sees.
And if the claim holds up, those revenue estimates are the first thing to go.
So what is Cerebras stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Cerebras could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
