Cerebras Beat Earnings. So Why Is the Stock Crashing?

Your Daily Market Update in 10 Minutes. My name is Zayd Admani and today is Thursday, August 13th. In today's episode, we'll get into why the AI trade is suddenly back in full swing. We'll also recap earnings from Cerebris, Supermicro, and Cisco. Then stick around to the end of the show to find out why the Los Angeles Lakers just sold again for the second time in less than a year. We got a great show for you today. Let's go. Stocks moved higher on Wednesday. The Nasdaq was up 0.5% and the S&P gained 0.3%, putting it just a few points away from a record high. The July CPI report definitely helped yesterday's rally. Headline inflation cooled to 3.4% while core inflation came down to 2.5%. Both those numbers right in line with expectations. And this morning, we got even more encouraging inflation data. The July producer price index, which measures inflation at the wholesale level, came in flat compared to June. That was better than expected. And if you look at the annual wholesale inflation, that dropped to 4.7% in July, down from the 5.5% in June. The biggest cause of the drop came from falling energy and food prices. So this is yet another data point for the Fed. And I think it gives them a reason to hold off on hiking rates at the September meeting. And I think the optimism about no rate hikes could be fueling the AI rally again. Names like Corwi, Dell, and SpaceX were some of the biggest winners on Wednesday. It also helps that earnings for some of these companies have come in strong as well. And by the way, this AI rally is spreading globally. I saw a crazy stat that South Korea's stock market, which is heavily reliant on memory giants SK Hynix and Samsung, has now rallied 22% in just 10 trading days, officially putting the KOSPI back into the bull market. It's a crazy turnaround because remember, the KOSPI fell 22% in July, which was its worst month since the global financial crisis. And now just two weeks later, it's up more than 20% from its lows. So the market continues to experience some serious whiplash. I mean, a few weeks ago, investors were dumping AI and chip stocks over fears that the AI boom had gone too far. Now, because of strong earnings plus cooler inflation, have investors piling right back in. Now, looking ahead, the next big thing to watch will be Nvidia earnings, which take place at the end of the month, and also the Fed meeting, which is taking place in Jackson Hole. We're going to be staying on top of that along with everything else happening in the market. So make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with Cerebris. Cerebris reported earnings last night, and this is one of those reports where the numbers look pretty good, but the stock is getting absolutely crushed anyways. Now, a quick refresher on Cerebris. They are a chip company that makes AI chips the size of dinner plates, and these chips are designed for fast AI inference workloads. Now, Cerebris is trying to take a bite out of Nvidia's market share. Now, there was a lot of hype around the company earlier in the year. They IPO'd back in May at $185 a share, raising $6.4 billion in the process. Now, we did a deep dive on them covering the company, and I got to say the stock has done pretty well. It's up over 40% from its IPO price, but shares are down more than 15% today following their earnings. Now, like I said, the earnings numbers were solid. For the second quarter, Cerebris reported $210 million in core revenue, which was double what they generated a year ago and ahead of Wall Street expectations. Their adjusted operating loss also narrowed to $34 million, which was way better than the roughly $63 million in loss that analysts were expecting. Not to mention, management also raised their full year forecast. But underneath those numbers, there are some concerns. The big one seems to be that actual hardware sales fell 23% from last year to about $54 million. Meanwhile, Cerebris' cloud computing business nearly quadrupled to roughly $128 million. So, you know, Cerebris pitched itself as an NVIDIA alternative, but they're now increasingly making their money from renting access to their chips through the cloud rather than actually selling their chips. Now, personally, I don't think that's a bad thing, especially if margins on the cloud business are better. But it is kind of weird that a chip company is selling less chips during this huge AI boom cycle. CEO Andrew Feldman on the earnings call said that their hardware sales are going to be lumpy because these are massive systems that they're selling, and sometimes customers literally don't have the data center space to install them. So I think investors are worried about the hardware slowdown. Another potential disappointment is that Cerebris' backlog stayed basically flat at around $25 billion. Now, that's still a healthy number, but with the AI infrastructure spending exploding right now, investors probably wanted to see that backlog number keep climbing. Overall, though, I think Cerebris' stock dipping after these earnings might just be a case of investors taking profit after the big run-up in the stock price following the IPO. And look, if Cerebris' chips are actually that much better and faster at inference workloads than what NVIDIA has to offer, they can continue to see a ton of demand for their chips as long as the AI build-out doesn't slow down. Let's talk about some stocks making moves today. Supermicro's stock jumped 19% yesterday and continues to rally today following their earnings report. Supermicro is a company that makes servers packed with NVIDIA chips that companies use to build AI data centers, and revenues last quarter nearly doubled from a year ago to $11.1 billion, while adjusted earnings came in at $1.70 per share. But the number that caught the market's attention was the guidance. Supermicro expects to make between $14.5 and $15.5 billion in revenue this quarter. Wall Street was expecting around $12 billion in revenue. On top of that, Supermicro expects their full-year revenue to come in at $72 billion, which was much higher than the roughly $54 billion that Wall Street was expecting. So the strong outlook had investors jumping back into the stock. Supermicro was the best-performing stock in the S&P 500 on Wednesday, and shares are up another 2% this morning at the time of this recording. Now, on the flip side, Cisco's shares are dropping despite also reporting better-than-expected earnings. Cisco makes networking equipment, the switches, the routers, and other hardware that connects all of these AI servers together. Revenues jumped 18% to $17.3 billion. That beat expectations, and the company's networking business grew 28%. On top of that, Cisco booked a record $9.3 billion in AI infrastructure orders during the past year. So overall, those were solid numbers, but the problem for Cisco is that they only expect about $7.5 billion in AI-related revenue this fiscal year. Investors apparently wanted to see a lot more, considering the company already has more than $9 billion worth of AI orders. Not to mention, Cisco's gross margins also slipped from 68.4% down to 66.3%, potentially because components like memory are getting more expensive. So for those reasons, Cisco stock is sliding this morning. It's down 7% in pre-market trading. If you zoom out on the stock chart, though, Cisco stock has gone up over 60% heading into this earnings report. Let's wrap the show with a fun fact. The Los Angeles Lakers just sold for a record $12.5 billion, and this is the second time the team has been sold in less than a year. Long-time listeners know I'm a big NBA fan, so this news was the talk of the group chats yesterday, and everyone was shocked. The thing is, Mark Walter just bought the controlling stake of the Lakers back in October of 2025 at a $10 billion valuation, and now less than a year later, he's selling his stake at a $12.5 billion valuation? Mark Walter basically flipped the Lakers like it was a meme stock or something, and I don't think that was the original intention when he bought the team. By the way, the buyers of the Lakers are venture capitalist Josh Kushner and former Disney CEO Bob Iger, who stepped down as CEO back in March. So the chatter right now is that something fishy might be going on. Bloomberg had a report yesterday that Mark Walter's broader business empire is currently facing scrutiny from the Justice Department. In fact, federal agents even seized Walter's phone and computer last year as part of this investigation. And according to this same Bloomberg report, some of the money from this Lakers sale will help Walter's companies pay down loans that his insurance business has made to other parts of his own business empire. So we don't know the full story yet. There's a lot happening behind the scenes. I'm sure we're going to get more information over the next few weeks. By the way, Mark Walter also owns the L.A. Dodgers, which are the best team in baseball right now. And I wonder if he might sell the Dodgers at some point as well. Anyways, I'm sure we'll get more details soon. As a basketball fan, though, I'm really curious to see what the Lakers will look like. Under Josh Kushner and Bob Iger. You know, Bob Iger was a great CEO at Disney, at least in the early parts of his tenure. But is that going to translate into running a basketball team? I also wonder if LeBron knew about some of this turmoil behind the scenes and that's why he chose to leave the Lakers. I'm just throwing it out there. All right. Let me know in the comments on what you guys think. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys back here tomorrow.