Cerebras Systems (CBRS) shares plummeted 16.39% in after-hours trading on Wednesday, reversing a strong intraday rally. The sharp decline came immediately after the company reported its second-quarter fiscal 2026 financial results, which presented a mixed picture that ultimately spooked investors.

While the company raised its full-year core revenue guidance to $880-$890 million and reported core revenue of $210 million that beat estimates, the GAAP results significantly missed expectations. The company posted a GAAP loss of $2.98 per share, far wider than the analyst consensus estimate of a $1.41 loss. GAAP revenue of $180.11 million also missed the $194.2 million consensus. The massive GAAP loss was driven by a steep drop in GAAP gross margin to 14% and a surge in stock-based compensation expenses, which ballooned to over $377 million in the quarter. This disconnect between strong non-GAAP operational metrics and weak GAAP profitability triggered a wave of profit-taking after the stock had surged over 11% during the regular session.

Despite the positive strategic developments, including a raised annual forecast, an expanded partnership with OpenAI, and a cloud business that nearly quadrupled year-over-year, the headline earnings miss and severe GAAP operating losses overshadowed the operational progress. The after-hours plunge reflects immediate market disappointment with the bottom-line figures, even as the company's long-term AI infrastructure story remains intact.