US stocks: Cerebras slumps 18% as mixed quarterly results test AI growth narrative

Expectations were high for AI-linked companies including Cerebras and networking equipment maker Cisco, given the strong run-up in shares driven by Big Tech's ballooning spending, set to cross more than $740 billion for this year. Here are some details:

Cerebras, in its second earnings report as a public company, offered a mixed picture as it increasingly derived revenue from cloud computing rather than its AI chips.

The AI chips business had helped position Cerebras as a challenger to Nvidia and fueled a 41% rise in shares from the IPO price of $185.

The Sunnyvale, California-based company's cloud business roughly quadrupled to $126 million, versus the year-ago quarter.

But its hardware sales, including AI chips, declined to $54.1 million from $70.3 million a year ago.

Citi and Mizuho cut their price targets slightly; the median target as per estimates compiled by LSEG implied an upside of 15% from the previous close.

Separately, shares of Cisco Systems fell around 8% as its outlook fell short of lofty expectations tied to its rise as a beneficiary of the AI data center buildout. The stock has gained more than 60% this year.

Cisco expects $7.5 billion in revenue from AI infrastructure orders from hyperscalers in fiscal 2027.

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