By Paul R. La Monica
Cerebras Systems enjoyed a blockbuster debut back in May, surging 68% from its initial-public-offering price. But it has been a different story since then for the artificial-intelligence chip maker. The stock has tumbled nearly 30% from its first day closing price. This should serve as a potential warning sign for giddy SpaceX investors, even as that stock has continued to climb since its IPO.
Cerebras will report results for the first quarter on June 23. The company should post strong revenue growth, with Wall Street forecasting sales of $181.2 million, up 82% from a year ago. But it is expected to lose $54.8 million, more than double the net loss of $23.9 million from the first quarter of 2025. Cerebras, in fact, isn't expected to be profitable until next year.
Investors may have bid up Cerebras on its debut day due to excitement about its robust sales and ties to the AI narrative. But it appears that traders have sobered up a bit and recognize -- if belatedly -- that valuations and fundamentals still matter.
"We're exercising caution about feeding the frenzy for IPOs," says Matt Farrell, deputy chief investment officer of WE Family Offices. "You can't expect a stock to pop and just stay there. There will be more volatility. Be patient."
Cerebras is now trading at nearly 60 times price-to-sales estimates for 2026, compared with 10, 13, and 17 times this year's sales forecasts for semiconductor competitors Intel, Nvidia, and Advanced Micro Devices, respectively. Cerebras looks even frothier on a price/earnings basis, fetching a multiple of more than 260 times estimates for 2027. Nvidia's 2027 P/E is under 17.
Despite this, Wall Street is largely bullish on Cerebras. Ten of the 11 analysts who cover the stock have it rated a Buy, and the consensus price target of $294 a share is more than 30% above where it stands now. Still, that's little consolation for investors who bought the stock on day one. Cerebras opened for trading at $350 on May 14 and rose as high as $386.34 before closing at $311.07. Anyone who bought shares in the aftermarket that day would still be underwater -- even if the stock reaches Wall Street's target price.
Investors in SpaceX may want to pay attention to what's happened to Cerebras after its successful first day. Even though it seems highly likely that analysts will issue glowing coverage of SpaceX in a few weeks, the stock could still come under pressure if the market begins to question its valuation and whether it has risen too far too quickly. Insiders might also start selling shares once staggered lockup periods expire.
"Investors are willing to fund differentiated growth stories, but performance has been uneven," said analysts at LPL Research in a report about IPOs. "Strong first-day demand hasn't necessarily translated into sustained outperformance. That is a useful reminder for investors preparing for larger and louder offerings."
SpaceX may very well turn out to be a great holding for the long haul. But Cerebras shows that it isn't always easy for a newly public stock to keep the momentum going in the short term once the early IPO euphoria fades.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
June 18, 2026 02:30 ET (06:30 GMT)
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