Cerebras Systems (CBRS) experienced a severe 17.65% plunge in post-market trading, completely reversing a robust intraday rally. The sharp decline was triggered immediately after the company reported its second-quarter fiscal 2026 financial results, which presented a deeply mixed picture that spooked investors.

The AI chipmaker posted GAAP revenue of $180.11 million, a 74% increase year-over-year but significantly below the analyst consensus estimate of $194.23 million. The bottom line was an even larger shock, with a GAAP loss of $2.98 per share, far wider than the expected loss of around $1.62 per share. This massive loss was driven by a steep drop in GAAP gross margin to 14% and a surge in stock-based compensation expenses exceeding $377 million for the quarter. While the company highlighted strong non-GAAP core metrics—including core revenue of $210 million that beat estimates and a raised full-year core revenue guidance to $880-$890 million—the headline GAAP miss and widening operating losses proved too much for investors who had bid the stock up sharply during the regular session.

Adding to the pressure, hardware revenue declined 23% year-over-year to $54.1 million, contrasting with the nearly quadrupled cloud services revenue. The CFO also noted that adjusted gross margin was pressured by approximately 500 basis points due to higher costs from renting back systems to expand cloud capacity. The disconnect between the company’s optimistic long-term AI infrastructure story and its near-term GAAP profitability triggered a wave of profit-taking, leading to the dramatic post-market decline.