Culper Report Pressures Cerebras Stock, Puts Chip Lifespan at 1.5 to 2.5 Years
Key Facts
Culper Research said it was taking a short position in Cerebras and published a report criticizing the company’s technology, coinciding with a decline in the stock during trading on Wednesday, October 28. Investing.com cited the report as estimating that Cerebras processors have a field operating life of 1.5 to 2.5 years. The company’s stock closed at $119.31 on October 27, then at $112.56 in the following session, according to EL7 data. Investing.com’s coverage said the stock fell 4% during Wednesday trading, while the decline also coincided with the expiration of a post-IPO share lockup that made about 19.4 million shares available for trading. Reuters was unable to independently verify the report’s claims, and Cerebras did not immediately respond to its request for comment.
Culper’s thesis focuses on the durability of the company’s chips and the materials used in their design. Culper said Cerebras relies on the commercial material PariPoser, which it said was developed in the 1980s, instead of a new proprietary conductor. It presented this point as casting doubt on the company’s account of developing a material to address thermal expansion, but it remains a claim by the firm that announced a short position. Culper’s estimate of operating life directly relates to this aspect of the report, setting out a time range for what it described as the chips’ performance in the field. Attributing the estimate to Culper is essential in assessing its potential effect on the economics of Cerebras’ computing services.
Culper also alleged that Cerebras runs continuous background operations to keep its chips from going cold. According to Investing.com’s coverage, the report cited remarks attributed to a company solutions engineer at an industry event in June 2026. Culper linked these claims to how the systems operate, alongside its statements about the materials used and the chips’ lifespan. The coverage did not present these claims as independently verified findings, and Reuters also said it was unable to verify them independently. The allegations about background operations therefore remain claims attributed to the short seller’s report.
The report came as the company posted strong second-quarter revenue growth, alongside a clear gap between its GAAP gross margin and its underlying non-GAAP measure. Total GAAP revenue was about $180.1 million, up 74% year over year, while cloud and other services revenue reached $126.0 million, an increase of 281%. GAAP gross margin was 14%, compared with an underlying non-GAAP gross margin of 41%. CEO Andrew Feldman said underlying revenue more than doubled to $210 million and cloud activity approached four times its level a year earlier. These results put cloud business growth at the center of discussion about the impact of Culper’s allegations on the company’s model.
Customer commitments and data centers form another part of the backdrop to discussion of the company’s ability to turn demand into operating performance. Cerebras’ filing with the U.S. Securities and Exchange Commission said OpenAI had committed to purchasing 750 megawatts of inference computing capacity and related services, with deployment expected in tranches between 2026 and 2028. The agreement includes an option for OpenAI to buy an additional 1.25 gigawatts of capacity, with deployment by the end of 2030. Cerebras’ remaining performance obligations totaled about $25.4 billion on June 30, 2026. The company warned in its filing that long-term data center commitments could extend beyond the terms of its cloud service contracts, and that weaker demand or a need to reduce those commitments could hurt results.
Cerebras announced plans on October 27 with Oracle to make inference services available through Oracle Cloud Infrastructure during calendar year 2027. The announcement puts planned expansion of the company’s cloud services in the backdrop to the stock’s decline, but market coverage also linked the move to the expiration of the share lockup and the release of the Culper report. The available facts do not establish that the report alone caused the decline. The company is scheduled to report third-quarter results after the market closes on Thursday, November 12, 2026. It will hold a call to discuss the results at 5 p.m. Eastern Time that day.