Cerebras jumps 17% as Wall Street backs the Nvidia challenger's AI strategy

Shares of Cerebras Systems CBRS surged more than 17% on Monday after a wave of Wall Street firms initiated coverage of the AI chipmaker.

Analysts largely endorse the company's unconventional approach to artificial intelligence computing and highlight its potential to challenge established industry players.

The stock gained after at least nine brokerages, including IPO underwriters Morgan Stanley, Citigroup, Barclays, and UBS, began coverage following the expiration of the post-listing quiet period.

The bullish commentary comes just weeks after Cerebras made its Nasdaq debut, attracting investor attention with its unique chip architecture and high-profile partnerships.

Analysts see opportunity in AI inference market

Unlike traditional semiconductor companies that rely on clusters of graphics processing units, Cerebras has built its business around wafer-scale engine chips that are roughly the size of a dinner plate.

The company argues that its technology can process AI workloads more efficiently by reducing the need for complex networking between multiple chips.

Analysts believe that approach could become increasingly valuable as the AI industry shifts its focus from model training toward inference, the process of generating responses and executing tasks in real time.

"As AI workloads become increasingly reasoning-intensive, demand for fast, low-latency inference is growing rapidly," Morgan Stanley analysts led by Joseph Moore wrote in a research note.

"This is a unique chance to invest in an AI processor company with a first-mover advantage against Nvidia, and offers substantial upside as the category evolves."

Morgan Stanley initiated coverage with an Overweight rating and a $250 price target.

The brokerage said Cerebras' existing customer agreements provide visibility toward approximately $6 billion in annual revenue by 2028, with scope for additional upside.

Citigroup was even more optimistic, assigning a 12-month price target of $340, according to data compiled by LSEG.

Mizuho analyst Vijay Rakesh began coverage with an Outperform rating and a $300 target price, while Wedbush analyst Matt Bryson initiated with a Buy rating and a $270 target.

"With the industry focused on inference to deliver Agentic AI solutions, we see Cerebras well-positioned as the industry leader in fast inference," Rakesh wrote.

Customer concentration remains a key risk

Despite the positive outlook, some investors remain cautious about the company's reliance on a small number of major customers.

At the end of 2025, Cerebras reported a backlog of $24.6 billion, with a significant portion tied to a cloud-services agreement involving OpenAI.

However, analysts noted that the company's relationship with Amazon Web Services could help diversify its customer base over time and reduce concerns about concentration risk.

"With a differentiated architecture, a step-change in contracted revenue from OpenAI and AWS, and a market only now learning to pay for speed, we see an asymmetric, upside-skewed setup," Wedbush's Bryson wrote.

Stock recovers after post-IPO volatility

Cerebras debuted on the Nasdaq more than three weeks ago and initially surged, closing roughly 70% above its IPO price of $185.

The stock subsequently retreated more than 30% as concerns over stretched valuations, a strong rally in technology stocks, and expectations for tighter Federal Reserve policy weighed on sentiment.

The company counts Amazon and OpenAI among its customers and has backing from both the ChatGPT maker and Japanese investment giant SoftBank.

Reports before the IPO suggested SoftBank had explored taking the company private.

Monday's rally comes amid continued enthusiasm for AI-related stocks.

The Philadelphia Semiconductor Index has gained 68% this quarter and is on track for its strongest quarterly performance since the height of the dot-com boom in 2000.

For investors, the latest analyst endorsements suggest that many on Wall Street see Cerebras as one of the more intriguing emerging players seeking to carve out a place in the rapidly evolving AI hardware market.

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