Deep dives · Initiation
Cerebras Systems: the contract is signed, the build is the risk
Demand is signed and the speed edge is real, but turning a $25.4bn backlog into revenue depends on the build-out. At $169.52 the shares already price our base case, so we initiate at Hold with a $180 target.
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Key takeaways
- Core cloud revenue rose 287% year on year to $127.7m in Q2 2026
- The 10-Q expects 22% of RPO ($5.6bn) by 30 Jun 2028; we model $5.3bn of cloud revenue over the same period
- On the gpt-oss-120b benchmark Cerebras streamed 1,741 tokens per second, against 706 for SambaNova and 320 for Azure
- Initiate at Hold with a $180 target (bear $71, bull $299)
Investment thesis
Demand is signed and the speed edge is real: RPO was $25.4bn at 30 Jun 2026, mostly a 750MW OpenAI agreement. Converting that backlog is the swing factor, because the build-out, not demand, limits revenue. At $169.52 the shares already price our base case.
Valuation
Our $180 target is the base case: 7.5x FY28E sales, discounted. Bear is $71 and bull $299, with a probability-weighted value of $171. EV of $32.6bn is 11.3x FY27E GAAP sales.
Our estimates
| Line | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue | $861.3m | $2,885m | $5,844m |
| EPS | −$4.75 | −$0.82 | $3.83 |
Risks to our view
- Customer concentration: OpenAI is about 79% of RPO, a risk worth about $57 a share
- Capacity execution: a two-quarter build slip costs about $32 a share
- Margin, foundry, geopolitics, competition and insider supply, each worth $8 to $25 a share