diff --git a/examples/jax/collective_gemm/test_gemm.py b/examples/jax/collective_gemm/test_gemm.py
index c2db8fc44a..8221d7bbfd 100644
--- a/examples/jax/collective_gemm/test_gemm.py
+++ b/examples/jax/collective_gemm/test_gemm.py
@@ -151,8 +151,20 @@ def run_gemm_tests(args, mesh=None):
         jax.block_until_ready(gathered_output)
 
     if args.enable_result_check and args.process_id == 0:
+        # CGEMM + RS + BF16 uses TE's reduce_bf16 kernel (sequential left-to-right in FP32).
+        # With catastrophic cancellation the output is near zero while the absolute diff can
+        # reach 1 ULP of the partial GEMM magnitude (~0.0625 for typical transformer
+        # activations at O(8) scale), which exceeds the previous atol=1e-5. The 2x
+        # margin (0.125) covers this worst-case 1-ULP absolute difference.
+        is_cgemm_rs_bf16 = collective_op == CollectiveOp.REDUCE_SCATTER and not use_quantization
+        rtol = 1e-2 if is_cgemm_rs_bf16 else None
+        atol = 0.125 if is_cgemm_rs_bf16 else None
         assert_allclose(
-            gathered_ref_output, gathered_output, dtype=get_tolerance_dtype(quantizer_set)
+            gathered_ref_output,
+            gathered_output,
+            dtype=get_tolerance_dtype(quantizer_set),
+            rtol=rtol,
+            atol=atol,
         )