Why Lucid Sees AI Tailwinds Driving Long-Term Upside for TSS Despite Near-Term Revenue Drop

TSS, Inc. (NASDAQ:TSSI) is one of the best-performing small-cap tech stocks in the past three years.

On December 1, Lucid Capital Markets initiated coverage of TSS with a Buy rating and a $15 price target, implying roughly 56% upside from the $9.63 price cited at the time of the report.

Lucid’s pitch is simple: TSS is leveraged to the AI data-center buildout as a systems integrator that procures hardware, builds server racks, and maintains networks for enterprise customers, benefiting from a tight commercial relationship with Dell, a major supplier of AI-enabled servers. The firm expects headline revenue to decline by ~24% in 2026 as the company laps unusually large, low-margin procurement volumes from early 2025. Still, it argues growth should continue in the higher-margin systems integration and facilities management segments.

Valuation is the tension point. Lucid notes TSS trades at less than 1x on EV/Sales with limited institutional ownership, suggesting under-recognition.

TSS, Inc. (NASDAQ:TSSI) provides data-center services and AI/HPC infrastructure integration: procurement, rack buildout, and lifecycle services for enterprise and technology customers, with operations closely tied to Dell’s server ecosystem.

While we acknowledge the potential of TSSI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.