Cerebras Stock Is Falling After Earnings. Morgan Stanley Says You Should Buy the Dip.

Cerebras System (CBRS) shares closed lower on Wednesday, even though the artificial intelligence (AI) chipmaker posted a 92% increase in its Q1 revenue on a massive contraction in net loss to about $14 million. 

Investors responded mostly to management’s muted profitability guidance, specifically a projected sequential decline in the gross margin to 37% in the current quarter. 

Still, Morgan Stanley analysts led by Joseph Moore recommend buying the post-earnings dip in Cerebras stock that’s now down about 30% versus its post-IPO high. 

Why Morgan Stanley Is Bullish on Cerebras Stock

In a research note this morning, Moore maintained a “Buy” rating on CBRS shares and raised his price target to $273, indicating potential for a more than 45% rally from current levels. 

According to Moore, the fundamental demand for Cerebras’s unique wafer-scale technology remains intact.

Crucially, the company has locked in a massive, multi-year partnership worth over $20 billion with OpenAI to deploy 750 megawatts of high-speed artificial intelligence inference infrastructure.

With OpenAI’s advanced GPT-5.4 model already running on CBRS hardware, Moore views this alliance as definitive proof that elite AI developers rely heavily on Cerebras for industry-leading speed. 

Cerebras’s Margins Could Recover Later This Year

In its report, Morgan Stanley urged long-term investors to look past the temporary infrastructure capacity constraints that triggered the rout on June 24. 

The projected margin squeeze doesn’t reflect weak demand or poor pricing power. Rather, Cerebras simply can’t secure physical data center floor space fast enough to house its massive chips, it told clients. 

To fulfill immediate demand, the Nasdaq-listed firm is temporarily renting back its own systems from an existing client, which analyst Joseph Moore sees only as short-term friction. 

Combined with a newly minted multi-year deal with Amazon Web Services (AWS), he views the current dip as offering an attractive entry point before margins recover.  

What’s the Consensus Rating on CBRS Shares?

Note that Morgan Stanley isn’t the only Wall Street firm recommending owning CBRS stock at current levels. 

The consensus rating on Cerebras Systems sits at “Strong Buy” currently, with the mean price target of $289 indicating potential upside of nearly 60% over the next 12 months.