Cerebras Systems' stock plummeted 5.06% during intraday trading on Tuesday, extending recent declines for the AI chipmaker.

The sharp drop reflects ongoing profit-taking pressure following a series of bullish analyst initiations earlier in the session. Despite receiving multiple buy ratings and optimistic price targets from top investment banks, investors appear to be locking in gains after the stock's recent rally. The catalyst from the company's inclusion in the S&P index last month has now been fully priced in, removing a key support for the shares.

Additional selling pressure stems from concerns over the company's rich valuation, with its price-to-sales ratio remaining far above industry averages. The current high interest rate environment continues to weigh on richly valued growth names like Cerebras. Furthermore, the stock faces potential headwinds from its post-IPO lockup expirations, which could unleash additional shares into the market over time, mirroring patterns seen in other large technology listings.