Cerebras drops 13% as AI chip selloff precedes Supernova event

AI hardware stocks fell broadly Tuesday as investors de-risked ahead of Cerebras Systems' Supernova event, with Cerebras down 13% to $220, Intel off 7% and AMD down 5% at midday. The Philadelphia Semiconductor Index dropped about 5.4%, with every component trading lower as the 30-year Treasury yield hit a 19-year high of 5.25%.

"The pullback reflects profit-taking after Monday's surge, layered on a macro rotation out of long-duration growth names," said Matt Bryson, an analyst at Wedbush who raised his Cerebras price target to $290 from $280. Bryson cited OpenAI's commitment to take 750 megawatts of Cerebras capacity by 2028, with contract options extending through 2030.

Cerebras' decline was steeper than peers because of company-specific overhangs. Roughly 36.4 million shares became eligible for sale around Aug. 14, creating a lockup-style overhang, while management warned that renting back AI compute from an existing customer while its own data centers come online will weigh on gross margins. Adjusted gross margin fell to 40.6% in the second quarter from 46.5% in the first, with the rental arrangements cutting about five percentage points.

The selloff is the flip side of a remarkable run. Cerebras surged 15.1% Monday after Tiger Global disclosed a 3 million-share stake valued at $663 million, Citadel Advisors reported a 1.25 million-share position, and ARK Invest bought 106,941 shares. The stock still trades at roughly 58 times projected 2026 core revenue, which management raised to $880 million to $890 million after second-quarter core revenue more than doubled to $209.9 million.

The margin question hangs over Supernova

The Supernova livestream at 6:30 p.m. ET is the pivot. Analysts expect the event to feature WSE-4, the next iteration of Cerebras' Wafer-Scale Engine, which could extend the inference-speed narrative supported by OpenAI's GPT-5.6 Sol Ultrafast mode running at up to 750 output tokens per second — as much as 14 times faster than standard processing.

The bigger question is whether Cerebras can convert that demand into durable profits. The company's $25.4 billion in remaining performance obligations, anchored by a multiyear OpenAI deal reportedly valued at more than $20 billion, requires extensive data-center buildout before revenue is recognized. Cerebras ended the quarter with $8.6 billion in cash, but its expected 41% to 43% gross margins remain well below Nvidia's mid-70% range.

Intel and AMD give back gains

Intel and AMD are giving back portions of massive one-year runs — INTC up 321% and AMD up 185% — rather than reacting to company-specific news. AMD's second quarter was strong, with record revenue of $11.5 billion and data-center revenue up 107% year over year, and third-quarter guidance set at about $13 billion. That is the kind of setup where profit-taking dominates on a risk-off day.

The uniformity of the selling across compute, memory and optics — with Micron, Coherent and Western Digital all lower — points to wholesale de-risking rather than company-specific news. The VIX at 15.19 suggests a rotation dynamic rather than panic.

If Supernova underwhelms, expect the selling in AI hardware to bleed into Wednesday. If WSE-4 extends the inference-speed lead and management shows a path to margin recovery, the pullback could prove a buying opportunity for a stock that has gained nearly 50% over the past month.

This article is for informational purposes only and does not constitute investment advice.