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Penguin Solutions: Stronger Earnings Meet a Fuller Valuation

Writer: Brigette Mwaura
Brigette Mwaura
19 hours ago
8 min read

Summary

  • I am downgrading Penguin Solutions from a STRONG BUY to a HOLD. Execution improved, but the rerating from $32.40 to $53.30 absorbed most of the near-term upside. Q3 FY26 net sales reached a record $479Mn and adjusted EPS was $0.84, beating consensus by 13.6% and 50.0%, respectively.


  • The demand thesis strengthened. AI-driven businesses were 74% of sales and grew 104% y/y, led by Integrated Memory at $275Mn and 111% growth.


  • My FY27 base case is $2.17Bn of revenue and $3.38 of adjusted EPS. Applying 18x and discounting the August 2027 value at 10% produces a $56 present target.

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3D stack diagram of Penguin Solutions AI factory platform, showing AI Ops, MemoryAI, ComputeAI, services, and partner ecosystem labels
Penguin Solution AI Factory Platform. Source: Penguin Solution

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