Penguin Solutions, Inc. (NASDAQ:PENG) stock rose sharply Wednesday after the company beat fourth-quarter expectations and issued a stronger fiscal 2027 outlook.
Quarterly revenue of $566.69 million beat the $516.12 million estimate. Adjusted earnings of $1 per share also topped expectations of 78 cents.
Management raised its fiscal 2027 outlook, citing stronger AI infrastructure bookings, a growing pipeline and sustained demand for data center memory.
AI Demand Drives Growth
Penguin Solutions said AI-focused businesses accounted for 78% of fourth-quarter net sales.
President and CEO Kash Shaikh said non-hyperscale AI infrastructure and integrated memory represented 78% of company net sales and grew 141% from a year earlier.
The company added six AI infrastructure customers during the quarter. They included four NEO clouds, a quantitative trading firm and an enterprise customer.
Penguin Solutions added 17 AI infrastructure customers and recorded 12 expansions during fiscal 2026. Management also said bookings grew faster than net sales, helping the company finish the year with record backlog.
Stronger Bookings Lift Outlook
Penguin Solutions expects fiscal 2027 revenue of $2.25 billion to $2.596 billion, above the $2.20 billion estimate.
Adjusted EPS guidance of $3.75 to $5.15 topped the $3.25 estimate. GAAP EPS guidance of $2.80 to $4.20 also exceeded the $2.13 Street estimate.
Management said stronger-than-expected AI infrastructure bookings over the past 90 days supported the higher Advanced Computing outlook.
Interim Chief Financial Officer Aaron Johnson said the company booked more business than expected and continues to see a strong pipeline.
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NEO Cloud, Memory Demand Strengthen
Management said several NEO cloud projects are underway, with Penguin Solutions handling data center construction, management or procurement.
Executives said NEO cloud economics are similar to enterprise on-premises deployments. Those projects can also include managed-services agreements lasting three to five years.
Meanwhile, the company’s memory backlog now extends at least four quarters and continues to strengthen, according to Shaikh. Management also highlighted demand for CXL memory expansion products tied to AI inference workloads.
Penguin Solutions said agentic AI is emerging as a structural driver of data center memory demand, as inference workloads require more memory capacity and bandwidth.
A heavier mix of AI infrastructure hardware could pressure margins. However, management said higher software and services attach rates could help offset that impact.
The company also emphasized disciplined working capital management as it funds further growth.
Following the results, Needham analyst Matthew Calitri maintained a Buy rating on Penguin Solutions and raised the price forecast to $85 from $80.
Heavy Volume, Short Interest Fuel Rally
Penguin Solutions shares jumped more than 17% Wednesday as trading activity surged following the stronger-than-expected results and outlook.
About 7.96 million shares changed hands, well above the 100-day average volume of roughly 2.82 million shares. The elevated volume pointed to heightened investor interest in the stock.
Short interest was also elevated, with about 7.08 million shares sold short, representing 19.68% of the tradable float. That high short exposure may have intensified buying pressure as the stock rallied.
PENG Price Action: Penguin Solutions shares were up 17.38% at $75.37 at the time of publication Wednesday, according to Benzinga Pro data.
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