Artificial-intelligence chip maker Cerebras Systems reported very strong third-quarter earnings results on Thursday afternoon. Its shares were up sharply in after-hours trading, after dropping 3.3% in regular hours.

Coming into earnings, the company had three challenges, two related to OpenAI.

At the end of the second quarter, Cerebras had a $25 billion backlog for its hardware and cloud services, and a "significant amount of the balance" was related to its OpenAI cloud agreement from the end of 2025, according to the company's quarterly filing. Backlog rose slightly to $26 billion in the third quarter.

So first Cerebras had to prove that it could execute on its end of the OpenAI deal, and in the third quarter it passed with flying colors. Adjusted revenue for the quarter reached $230.9 million, ahead of Wall Street analyst expectations of $214.7 million, and up 70% on the year. The adjustments are because of quirks in the company's accounting. In the first place, there is some pass-through revenue, which the company subtracts. Further, Cerebras has issued warrants to customers, and these get amortized as noncash reductions in revenue by standard accounting rules, so these are also left out of the adjusted figure.

The second notable challenge was to show that the company can find other customers besides OpenAI, raise the backlog, and lower its customer concentration. The company has announced deals with larger cloud providers Amazon.com and Oracle to host its AI servers, but both announcements were short on details. The small increase in backlog doesn't allay these concerns.

Finally, profitability has been elusive, but the company showed progress here. While still a loss, Cerebras' -14% adjusted operating margin was much better than its guidance from three months ago of around -24%.

Fourth-quarter outlook for adjusted revenue and margins was similarly strong.