UBS cuts Cerebras target to $155 from $250 as CEO says data-center builds are behind schedule

UBS found the backlog behind the pop can shrink

Cerebras rose about 17% after hours on Thursday on a third-quarter beat, a raised outlook and a new cloud customer, Microsoft▼−0.28% — Microsoft, down 0.28 percent today ¹. The day after brought the harder news. UBS kept its Buy rating but cut its target to $155 from $250, after netting down OpenAI'sPVT$1.18T — OpenAI, private, latest valuation $1.18T share of the $26.1 billion in remaining performance obligations, the contracted revenue Cerebras▲+8.48% — Cerebras, up 8.48 percent today has not yet booked, for data-center shell delays that could let OpenAI claim credits ³⁴.

Two details from the same day sharpen it. The quarter's core revenue added back $36.4 million of amortization on customer warrants, tied mainly to OpenAI's 33.4 million warrant shares ³. And Amazon Web Services▼−1.16% — Amazon Web Services, down 1.16 percent today, Oracle▼−2.86% — Oracle, down 2.86 percent today and Microsoft, the logos the diversification story rests on, are not yet in that backlog and bring no revenue, on The Next Platform↗'s reading ⁵. On Friday, chief executive Andrew Feldman said the data-center builds are behind schedule↗ ⁶.

The quarter beat on the adjusted measure, not on GAAP

Core revenue, which adds back stock-based pay, warrant amortization and some data-center costs, rose 70% to $230.9 million against the $214.7 million analyst consensus tracked by LSEG; GAAP revenue rose 55% to $210.8 million ¹⁷. Core cloud revenue grew 272% to $144.9 million, 63% of core revenue, while hardware fell to $68.9 million from $96.8 million ¹³⁸. Core net income of $29.8 million was the first adjusted profit as a public company; the GAAP net loss widened to $161.2 million ¹³.

The guide rose and Microsoft signed in October

The 2026 core outlook rose to $940–960 million from $880–890 million, and the fourth-quarter guide of $310–330 million↗ cleared the $271 million consensus ⁷⁸. Microsoft signed in October, with revenue from the first quarter of 2027 and terms undisclosed ¹⁷. The run is real: three straight quarters above guidance and a sales pipeline up more than tenfold in the quarter, by the chief financial officer's count ³⁸.

OpenAI is most of the backlog, and it can claim credits

OpenAI makes up the majority of the $26.1 billion in obligations, chief financial officer Bob Komin said on the earnings call↗ ⁹. Fourth-quarter cloud revenue is guided roughly flat, the company said, because land, power and construction delays held back early deliveries to OpenAI ⁹. UBS's arithmetic gives the slippage a price: when shells arrive late, OpenAI's obligations are netted down and the customer can claim credits, so delay pays OpenAI out of the number investors marked up on Thursday ³⁴.

Tripling revenue in 2027, as Feldman promises ⁸, off the roughly $950 million midpoint of the new guide implies about $2.85 billion, slightly under the $2.92 billion consensus ¹⁷.

Seven hundred megawatts still have to be paid for

Cerebras has 700 megawatts of data-center capacity under contract for delivery by the end of 2027, with new sites in Norway and Finland: a contracted figure, not capacity already running ¹²⁸. Nine-month spending ran $1.05 billion on property and equipment against $388.9 million consumed by operations, and it ended September with $7.8 billion in cash and short-term investments plus $850 million of debt capacity ¹⁸. The squeeze sits late in the year: about $497 million of capital spending and a $341 million operating outflow in the third quarter alone ¹⁰.

Feldman told CNBC↗ on Friday that Cerebras is weighing financing options to keep up with demand ⁶⁷. If the next leg of the build is funded with equity, it prices near Friday's close of $108.72 rather than the $185 of the May 14 listing, and the dilution lands below the entry of May's buyers ⁴⁸.

The next documents decide it: the fourth-quarter report against the $310–330 million guide, whatever financing Feldman has been weighing, and whether Microsoft's revenue starts on time in the first quarter of 2027 ³⁷.