Cerebras Systems Inc. experienced a decline in after-hours trading following a report showing a drop in hardware revenue, indicating sluggish progress in selling computers powered by its novel chip design for the newly public company.

Hardware sales fell 23% year-over-year to $54.1 million, the company stated in a Wednesday announcement. The bright spot in the report was the cloud business segment, which leverages the company's technology to provide AI computing power, seeing revenue nearly triple to $126 million.

This performance presents a mixed picture for investors. Cerebras shares have risen 42% since its initial public offering in May, positioning itself as a challenger to Nvidia in the AI chip market. However, its largest revenue source is now cloud computing. Following the earnings report, Cerebras shares fell roughly 14%.