Flex and Cerebras Systems have expanded their manufacturing partnership to ramp up CS-3 production at Flex's California facilities, increasing capacity by approximately 7x through 2026. The collaboration reflects a significant expansion of advanced manufacturing capacity in the United States, supported by new production lines, expanded floor space, advanced test infrastructure, and additional skilled manufacturing talent based in California.

The CS-3 is built on Cerebras' industry-leading wafer-scale engine architecture, featuring a processor physically larger than any conventional AI chip. The system integrates advanced liquid cooling, high-density power delivery, precision mechanical assembly, and tightly coordinated networking infrastructure into a platform designed for large-scale AI training and inference.

Manufacturing the CS-3 presents challenges rarely encountered in traditional server production. Each system requires specialized handling processes, custom tooling, precision calibration, and extensive system-level validation. Flex engineers worked closely with Cerebras to develop dedicated assembly flows, automated test stations, and new manufacturing methodologies tailored specifically for wafer-scale computing systems.

To support the ramp, Flex is expanding dedicated manufacturing operations for Cerebras in Milpitas, with multiple new assembly and integration lines coming online through 2026. The footprint devoted to CS-3 manufacturing is expected to grow substantially this year as production accelerates to meet customer demand from AI model developers, cloud providers, and enterprise customers.

Inside the Milpitas facility, production operations span precision mechanical assembly, high-power electrical integration, liquid cooling installation, optical networking validation, and full-rack system qualification. The site has expanded into a high-throughput manufacturing environment with parallel integration lines, enhanced burn-in and validation areas, additional automated test infrastructure, and increased warehouse and logistics capacity for critical components and finished systems.

The expansion is also contributing to growth in high-skilled manufacturing roles across the region, including manufacturing, systems integration, quality, supply chain, and testing. This partnership demonstrates that some of the world's most sophisticated AI systems are being designed, assembled, integrated, and tested in the heart of Silicon Valley.

Cerebras Systems Inc. reported first-quarter fiscal year 2026 revenue of $193.41 million, beating analyst estimates of $181.59 million, while its CEO identified data center availability as the primary constraint on artificial intelligence growth. The company posted a loss of $0.04 per share, significantly better than the expected loss of $0.16 per share. Following the results, shares dipped 15.95% to trade at $190.59 on Wednesday, despite the financial beat. Needham analyst Quinn Bolton reiterated a Buy rating and a price target of $300, while Morgan Stanley analyst Joseph Moore maintained an Overweight rating with a raised target of $273, and Wedbush analyst Matt Bryson maintained an Outperform rating with a target of $280.

AI's Bottleneck Has Changed

Speaking at the company's first earnings call, CEO Andrew Feldman stated that the biggest constraint on AI growth is no longer chip supply or customer demand, but the availability of data centers needed to deploy AI infrastructure at scale. "Demand is not the constraint. Supply is not the constraint. The constraint is data centers," Feldman said. He noted that Cerebras is actively searching for additional capacity globally, with discussions spanning markets from France and the Nordics to the UAE, India, the Middle East, Singapore, Australia, and Indonesia. The company expects new data centers to come online sequentially from Q3 through the following year.

Q1 2026 Financial Performance

The company delivered broad-based growth across its hardware and cloud segments. Core hardware revenue reached $111.6 million, up 60% year-over-year, while core cloud and other services revenue surged 167% to $79.8 million. Core gross margin improved to 46.5% from 42.1% in the prior year period, aided by higher pricing for fast inference and improved system utilization. Management noted that near-term margins would be impacted by the temporary rental of third-party capacity to meet surging demand before its own data centers come fully online. The company ended the quarter with $3.3 billion in cash, cash equivalents, restricted cash and short-term investments.

Strategic Partnerships and Business Highlights

The quarter featured significant developments in commercial deployments. Cerebras confirmed a definitive agreement with OpenAI, signed on December 24, 2025, for the purchase of more than $20 billion of compute over the next several years. Production for OpenAI began on February 1, 2025. Additionally, Cerebras completed a definitive agreement with Amazon.com Inc’s Amazon Web Services (AWS) to deploy its CS-3 systems in AWS data centers. This partnership utilizes a disaggregated inference strategy where AWS's Trainium 3 chips handle the prefill stage and Cerebras handles the decode stage. Revenue from the AWS agreement is expected to ramp in 2027. Analyst Quinn Bolton noted that OpenAI's GPT-5.4 is currently running on Cerebras hardware, and GPT-5.5 is in the process of being ported over.

Financial Outlook

Management provided guidance for the second quarter and full fiscal year 2026 on a core non-GAAP basis. For Q2 2026, the company projects core revenue of approximately $194 million, representing 88% year-over-year growth. For the full year FY2026, core revenue is projected to be in the range of $855 million to $865 million, up 69% year-over-year at the midpoint and topping Street expectations of $825 million. Gross margins are expected to fluctuate in the near term due to data center investments and temporary capacity rental costs, with full-year core gross margin forecast between 38% and 41%.