This Analyst Just Cut Its Price Target on Cerebras Stock. Here's Why.

Wedbush analyst Matt Bryson has reduced his price target for Cerebras Systems (CBRS) ahead of the company’s fiscal Q3 earnings scheduled to be released on Nov. 12. Consensus is for the artificial intelligence (AI) infrastructure firm to report -$0.13 in earnings per share (EPS) for its third financial quarter on nearly $215 million in revenue. 

Heading into the quarterly print, Cerebras stock is down roughly 40% over the past month.

Wedbush Still Sees Massive Upside in Cerebras Stock

Bryson’s downwardly revised $190 price objective still signals massive upside potential in CBRS stock. It therefore reflects a broader reassessment of valuation multiples across the semiconductor sector, not a fundamental deterioration in the company’s business.

According to the Wedbush analyst, recent weakness in Cerebras has been driven by concerns about AI data-center spending, along with questions surrounding the durability of the firm’s Wafer-Scale Engine (WSE) technology and its accounting practices. However, many of those risks are largely “misplaced/unsubstantiated,” Bryson told clients. 

Note that CBRS’s relative strength index (RSI) also currently sits in the early 30s, indicating it’s approaching oversold levels that often trigger a near-term rally. 

What Else Is Keeping Wedbush Bullish on CBRS Shares

In his research report, Bryson said Wedbush has not seen any evidence that “WSE lifetimes are very limited” or that the company is overstating profitability through aggressive depreciation assumptions. He also pushed back against speculation that OpenAI is scaling back its long-term partnership with Cerebras.

The Wedbush analyst remains convinced that the economics supporting CBRS cloud and inference business remain attractive, noting that “the prices being paid appear to represent relatively low cost per MW of data center capacity of inference.”

All in all, the firm’s revenue outlook remains supported by existing OpenAI-related commitments, leaving Cerebras shares “extremely well positioned” to avoid funding-related headwinds through at least 2028, he concluded. 

Wall Street’s Consensus View on Cerebras Systems

Interestingly, Wedbush is now among the more conservative Wall Street firms on CBRS shares. 

The consensus rating on Cerebras Systems remains at “Strong Buy,” with the mean price target of about $260 signaling potential upside of more than 30% from here. 

On the date of publication, Wajeeh Khan did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.