Key financial results

  • Core revenue for the second quarter was $209.9 million, representing a 103% increase year-over-year.Core revenue was $209.9 million, up 103% year-over-year.
  • The company reported a core operating loss of $33.6 million, with a core operating margin of negative 16%.Core operating margin was negative 16% compared to negative 42% a year ago, an improvement of approximately 2,600 basis points year-over-year.
  • Core gross margin was 40.6%, which was approximately 940 basis points higher than the same period in 2025.Q2 core gross margin was 40.6%, approximately 940 basis points higher than Q2 '25.
  • The company ended the quarter with $8.6 billion in cash, cash equivalents, restricted cash, and marketable securities.We ended Q2 with more than $8.6 billion in cash, cash equivalents, restricted cash and marketable securities.
  • Remaining performance obligations totaled $25.4 billion as of June 30, 2026.

Business segment results

  • Cloud and Services: Core cloud and other services revenue reached $127.7 million, an increase of 287% year-over-year.Core cloud and other services revenue was $127.7 million, up 287% year-over-year.
  • Cloud and Services: Core cloud and other services gross margin was 41.8%, an improvement of 1,600 basis points compared to the second quarter of 2025.
  • Hardware: Core hardware revenue was $82.1 million, up 17% compared to the prior year.Core hardware revenue was $82.1 million in the quarter, up 17% compared to last year.
  • Hardware: Core hardware gross margin was 38.8%, which is 510 basis points higher than the same quarter last year.
  • General: Management noted that the mix between cloud and hardware revenue can vary significantly quarter-to-quarter due to the timing of new capacity additions and hardware shipments.

Capital allocation

  • The company maintains an unused revolving credit facility of up to $850 million.We also have a revolving credit facility of up to $850 million that has been unused to date.
  • Management highlighted that net capital expenditure per megawatt is lower than most AI cloud providers because the company incurs costs primarily for its own hardware deployment at lower bill-of-materials costs.We are reimbursed for a meaningful portion of the remaining CapEx for data center fit-out as data center pass-through cost reimbursement from our largest customer.
  • Data center space remains the primary bottleneck for the entire AI industry.On the capacity front, data center space continues to be the bottleneck for the entire industry, and we are no exception.
  • The company is seeing a shift toward disaggregated inference, which separates prefill and decode stages to improve economics.Disaggregation is a form of specialization that is particularly well suited for workloads with well-known traffic patterns.
  • There is increasing market demand for fast inference, which the company argues changes user engagement and AI productivity.The market is realizing that speed is not a benchmark item. Speed changes user engagement, it changes agentic performance, and it changes AI productivity.

Competitive landscape

  • Cerebras identifies itself as one of only four companies, alongside Google, Amazon, and NVIDIA, that builds processors, systems, data centers, and delivers AI-based cloud services.Today, Cerebras is 1 of only 4 companies, Google, Amazon, NVIDIA and Cerebras, to build processors, systems, data centers and deliver AI-based cloud services to customers.
  • The company has established disaggregated inference partnerships with AMD for Helios racks and AWS for Trainium.We now have disaggregated inference solutions with 2 of the leading chip companies, AMD with their Helios and AWS with Trainium.
  • The partnership with OpenAI provides the company with scale and insight into frontier models.OpenAI provides, among other things, scale and frontier insight.

Macroeconomic environment

  • The call did not discuss the broader macroeconomic environment.

Growth opportunities and strategies

  • The company expects to more than triple core revenues in 2027.With the benefit of that progress, we expect to more than triple our core revenues in '27 and continue to grow at multiples in the years following.
  • The company is expanding into new markets such as security, citing a recent win with CrowdStrike.Fast AI enables AI-based security devices to sit in line with enterprise traffic and use LLMs to secure traffic so quickly that nobody notices.
  • The company plans to launch its CS5 system in the second half of 2027.Finally, we are currently on track to launch our CS5 in the second half of 2027.
  • The company expects to have solutions generally available through AWS Bedrock in the first quarter of 2027.Our work with AWS continues, and we expect to have solutions generally available in Q1 2027 through AWS' Bedrock platform.

Financial guidance and outlook

  • Q3 2026: For the third quarter of 2026, the company expects core revenue between $214 million and $216 million.
  • Q3 2026: For the third quarter of 2026, the company expects core gross margin between 38% and 40% and core operating margin between negative 25% and negative 23%.
  • Full Year 2026: For the full year 2026, the company raised core revenue guidance to a range of $880 million to $890 million.
  • Full Year 2026: For the full year 2026, the company raised core gross margin guidance to 41% to 43% and core operating margin guidance to negative 19% to negative 17%.

Data center and manufacturing capacity

  • The company has secured more than 600 megawatts of data center capacity that is either live or will be delivered by the end of 2027.
  • Manufacturing capacity is expected to increase by more than 10x in 2026, with further expansion planned for 2027.
  • The company is building new factories in partnership with Flex and Sanmina.
  • The company noted that it does not rely on HBM memory or CoWoS packaging, which helps avoid certain industry supply constraints.For example, we don't use HBM memory, CoWoS packaging or require 3-nanometer fab capacity.

Q2 FY2026 results

MetricResultChange
Core revenue$209.9 millionup 103% year-over-year
Core cloud and other services revenue$127.7 millionup 287% year-over-year
Core hardware revenue$82.1 millionup 17% year-over-year
Core gross margin40.6%940 basis points higher than Q2 '25
Core operating margin-16%improvement of 2,600 basis points year-over-year

How management sounded

Positive (+45 on our -100 to +100 scale). Management expressed high confidence in their growth trajectory, citing a $25 billion RPO and successful execution on capacity expansion, despite acknowledging data center availability as a bottleneck. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Execution of the 600-megawatt data center build-out pipeline through 2027.
  • The launch and ramp of the AWS Bedrock partnership in Q1 2027.
  • The commercial deployment of disaggregated inference solutions in Q4.
  • Progress on the CS4 and CS5 product roadmaps.

Earlier calls

  • Q1 FY2026 (Jun 23, 2026), tone Positive: Cerebras reported record Q1 revenue of $191.3 million, up 92% year-over-year. Cloud revenue grew 167% to $79.8 million. Management guided for full-year revenue of $855 million to $865 million, noting that data center capacity is the primary constraint to meeting robust demand.