Bull of the Day: Penguin Solutions (PENG)

Penguin Solutions (PENG) is a Zack Rank #1 (Strong Buy) that designs, builds, deploys and manages high-performance AI infrastructure for enterprises and NeoCloud providers.

Penguin has pulled back after the stock surged after a solid earnings report. Sector news has the stock under pressure, but this could be the right time for investors to enter following a breakout fiscal fourth quarter.

About the Company

Penguin operates three segments: Advanced Computing, Integrated Memory and Optimized LED. Its AI Factory Platform pairs hardware with Clusterware software and long-term managed services, giving customers a single partner from design through 24/7 operations.

The company is valued at $3 billion and has a Forward PE of 12. The stock has Zacks Style Scores of “C” in Value, “F” in Growth, and “A” in Momentum.

Earnings Take Flight

PENG reported fiscal Q4 EPS of $1.00 on October 6, more than double the $0.43 posted a year ago. Revenue jumped 68% to $567 million from $338 million. Adjusted EBITDA more than doubled to $93 million.

Management said performance accelerated sharply in the second half of fiscal 2026 after the launch of its AI Factory Platform and a sharper focus on data center demand. Gross margin dipped to 28.8% from 30.9% as hardware mix rose, but operating leverage more than made up for it.

Raised Guidance

The real story was the outlook as Penguin raised its fiscal 2027 view well above the preliminary 30% growth forecast it gave last quarter. The company now sees net sales of about $2.43 billion at the midpoint, up 40% plus or minus 10 points.

EPS is guided to $4.45, up 55% at the midpoint, as profits grow faster than sales.The upgrade was led by Advanced Computing, now expected to grow 40%, sharply above the prior mid-teens view.

Management credited stronger than expected bookings over the past 90 days and an accelerating NeoCloud pipeline, with most highlighted projects already in deployment, operations or procurement. Integrated Memory is expected to grow 50%, with backlog now exceeding record quarterly revenue and extending at least four quarters. Both volume and pricing are rising.

Estimates Are Soaring

Analysts moved quickly, raising estimates.

The fiscal 2027 Zacks Consensus Estimate jumped from $3.40 to $4.70 over the past 30 days, a 38% increase that now sits above the top of management’s midpoint. The current quarter estimate climbed 39% to $1.06, while next quarter rose 27% to $1.08.

Every revision over the past 60 days has been higher.

Looking further out, the fiscal 2028 consensus of $5.43 points to another 16% growth on top of this year’s jump.

Penguin Solutions, Inc. Price, Consensus and EPS Surprise

Penguin Solutions, Inc. price-consensus-eps-surprise-chart | Penguin Solutions, Inc. Quote

Goldman Sachs and Stifel both reiterated Buy ratings and lifted price targets to $85 from $75. Even the lone bear at Barclays raised its target to $60 from $40.

The Technical Take

After earnings the stock shot higher, going from $60 to $80. But negative new in the neocloud space, specifically CoreWeave, pushed the whole sector lower. This caused PENG to give up all of the post earnings gains.

The stock filled the gap and fell below the 50-day and found some footing. This is a very volatile name so let’s look at those moving averages:

21-day: $62

50-day: $56.50

200-day: $43

A move back over the 21-day MA would signal short-term bullishness has come back. The next level would be Fibonacci resistance at $70, which would have to break to push to all-time highs.

In Summary

PENG just delivered its strongest quarter in years, raised guidance well beyond its own preliminary view and sparked a wave of upward estimate revisions. With NeoCloud bookings accelerating, a memory backlog stretching a year out and the stock pulling back off its highs, investors get a second chance at an AI infrastructure name with real momentum.

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This article originally published on Zacks Investment Research (zacks.com).

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