The Business Model (How They Make Money)

Cerebras Systems Inc. (CBRS) is an artificial intelligence (AI) company that designs and builds specialized computer hardware and software to make AI computations incredibly fast. Think of them as creating super-powered brains for AI, far more efficient than standard computer chips for complex AI tasks. Their core mission is to accelerate AI by making it faster, easier to use, and more energy-efficient.

The company's main products include its unique Wafer-Scale Engine (WSE-3) semiconductors, which are essentially entire silicon wafers turned into single, massive processors, and its CS-3 supercomputers that house these chips. These systems are designed for organizations that need supercomputer-level performance for training large AI models or handling vast amounts of data.

Cerebras generates its money through a few key avenues:

• Hardware Sales: This is their primary revenue source, coming from selling their high-performance CS-3 systems. These systems are typically priced in the millions of dollars and are sold to high-end customers with significant AI computing needs. In 2025, hardware sales accounted for approximately $358 million, representing about 70% of their total revenue.
• Professional Services: Cerebras offers services like helping customers prepare their data, design AI models, oversee training, and optimize their systems. This service component is significant, accounting for between a quarter and a third of new customer engagements.
• Cloud Services: The company also provides access to its powerful systems through cloud-based offerings and its AI Model Studio. This creates a recurring revenue stream, allowing smaller teams or those who don't want to buy the full hardware to use Cerebras's computing power. In 2025, cloud and other services revenue reached $151.6 million, growing 99% year-over-year.

A significant portion of Cerebras's revenue in 2025 came from a few large customers, with two UAE-linked customers (Mohamed bin Zayed University of Artificial Intelligence and G42) accounting for approximately 86% of their 2025 revenue. However, the company has recently secured major deals with OpenAI and Amazon Web Services (AWS), which are expected to diversify its customer base and revenue streams going forward.

The Metrics That Matter Most

For Cerebras Systems, given its focus on cutting-edge AI hardware and its recent public offering, these are the most important financial pulses to monitor:

1. Revenue: This metric tells you the total amount of money the company brings in from selling its products and services. For Cerebras, a company in a high-growth industry with innovative technology, strong revenue growth is crucial. It shows that customers are adopting their unique wafer-scale AI solutions and that their market is expanding. In 2025, Cerebras reported revenue of $510.0 million, a 76% increase from the previous year. This rapid growth indicates increasing demand for their specialized AI infrastructure.

2. Operating Income: This metric shows how much profit a company makes from its core business operations before accounting for things like interest and taxes. For Cerebras, operating income is particularly important because their reported net income in 2025 was significantly boosted by a one-time accounting gain that wasn't related to their day-to-day business. Looking at operating income gives a clearer picture of whether their actual business of selling AI chips and services is profitable. In 2025, Cerebras reported an operating loss of $145.9 million, indicating that while revenue is growing, the company is still investing heavily in its operations and not yet profitable from its core business activities.

3. Gross Margin: This metric reveals the percentage of revenue left after subtracting the direct costs of making and selling their products and services. For a hardware-centric company like Cerebras, a healthy gross margin is vital because it shows how profitable their core products are before considering overhead like research and development or sales. A strong gross margin indicates that their innovative technology commands a good price relative to its production cost. Cerebras reported a gross margin of 39% in 2025. This figure is important to watch, especially as the company expands its cloud services, which tend to have lower margins than hardware sales.

4. R&D Expenses (Research & Development Expenses): This metric represents the money a company spends on developing new products, services, or improving existing ones. For Cerebras, a company built on groundbreaking AI chip technology, R&D expenses are a critical indicator of its commitment to innovation and staying competitive. High R&D spending is expected and necessary to maintain its technological edge in the rapidly evolving AI landscape. In 2025, Cerebras spent $243.3 million on R&D, which was a substantial 48% of its total sales. This highlights their intense focus on pushing the boundaries of AI computing.

How to Value This Company

The most relevant valuation metric for Cerebras Systems is the P/Sales (Price-to-Sales) ratio.

The P/Sales ratio compares a company's stock price to its total revenue. You calculate it by taking the company's total market value (all its shares multiplied by the current stock price) and dividing it by its total sales (revenue) over the last year.

Here's why it's the best way to figure out if Cerebras's stock is cheap or expensive right now: Cerebras is a high-growth company in an emerging and capital-intensive industry. As we saw, it's not yet consistently profitable from its core operations, and its net income in 2025 was influenced by a one-time accounting event. When a company isn't consistently making a profit, traditional valuation metrics like the P/E (Price-to-Earnings) ratio, which relies on earnings, become less meaningful or even negative.

The P/Sales ratio, however, focuses on the company's ability to generate revenue, which is a key indicator of its market adoption and growth potential. For a company like Cerebras, which is investing heavily in R&D and expanding its infrastructure to capture a large market opportunity, revenue growth is paramount. Investors are often willing to pay a higher P/Sales ratio for companies that are growing rapidly and have a strong competitive position, even if they are not yet highly profitable. It helps investors gauge how much they are paying for each dollar of the company's sales, providing a way to compare its valuation against other growth companies in the tech or semiconductor space. As of its IPO, Cerebras was trading at a very high P/Sales ratio, reflecting significant investor enthusiasm for its AI technology and growth prospects.