Freedom: Cerebras needs new orders, not just Altman’s backing, for sustainable growth

Shares of Cerebras Systems (CBRS) rose more than 6% in premarket trading on October 5 after OpenAI CEO Sam Altman publicly reaffirmed the partnership. Cerebras provides compute power for running OpenAI models, helping speed up response generation. Altman’s statement eased investor concerns about the partnership continuing. However, Freedom analyst Vladimir Chernov believes that a sustainable recovery in the stock requires new orders and improved financial performance.

Cerebras is a U.S. developer of specialized processors and computing systems for artificial intelligence. Its hardware is used to train neural networks and process queries to models that are already running. The company competes with Nvidia in the AI computing infrastructure market.

OpenAI support helped the stock bounce

Altman confirmed that Cerebras remains a close partner of OpenAI and the companies continue to work together to increase the speed of AI systems. After that, Cerebras shares gained as much as 6.1% in premarket trading.

Chernov estimates that the statement gave the shares a short-term boost, but it does not mean OpenAI will abandon Nvidia’s graphics processors for new models. These processors make it possible to perform many calculations simultaneously and are widely used in artificial intelligence systems.

The analyst notes that the recent drop in Cerebras shares of about 20% was linked to fears of losing orders. The partnership confirmation partly relieves concerns, but by itself it does not show how much additional revenue the company will receive.

Contracts and profitability matter for continued growth

Chernov believes that without specific news about expanding cooperation or improving profitability, the rebound could end quickly. It is important for investors to assess not only demand for Cerebras technologies, but also the company’s ability to turn that demand into profit.

In the analyst’s view, the high valuation of the shares and competition with Nvidia keep the risk of sharp price swings in place. More convincing grounds for sustainable growth would be an increase in orders, revenue growth, and a higher share of profit in sales.

Dependence on major clients remains a risk

Earlier, Freedom Broker reviewed the results of Cerebras’s IPO and the risks of its business model. A May report noted that the company raised $5.55 bn in the offering at $185 per share, and that by the time it went public it had signed a $10 bn contract with OpenAI.

At the same time, according to that report, 99% of Cerebras’s revenues came from just two clients. Such concentration makes results sensitive to the decisions of the largest customers. That is why news about cooperation with OpenAI can trigger a strong reaction in the stock, while confirmation of new contracts remains an important condition for strengthening investor confidence.

This is not an individual investment recommendation.