PENG Stock Forecast & Price Target

Penguin Solutions Inc. has reported a substantial growth trajectory, with Integrated Memory revenue increasing by 41% year-over-year to $137 million, indicating strong demand in this segment. The company's core AI, Memory, and Stratus portfolio exhibited a remarkable year-over-year growth of approximately 28-29%, with expectations of achieving around 30% growth in FY26. Additionally, Advanced Computing revenue saw a significant increase of 52% year-over-year, and the company is poised to benefit from emerging opportunities in CXL and photonic memory, further enhancing its growth prospects moving forward.

Penguin Solutions Inc. faces significant challenges, with a current non-GAAP EPS of $0.49 reflecting flat year-over-year performance despite managing operating expenses effectively, which has been overshadowed by a decline in gross margins and weakening LED business prospects. Management has indicated that FY26 will be a transition year, marked by an expected 9% reduction in Meta-related revenue and a 6% headwind from the exit of its legacy embedded computing business, translating into combined negative impacts on growth metrics. Additionally, with the anticipated cessation of hyperscale hardware sales and a notable decline in LED revenue, the company is forecasting a concerning overall impact on growth, particularly within its Advanced Computing segment.