Penguin Solutions Surpasses Q1 Expectations, Analyst Notes Reduced Reliance on Meta

Penguin Solutions Inc Surpasses Q1 Expectations, AI Progress Noted

Penguin Solutions Inc (NASDAQ: PENG) delivered first-quarter results that exceeded Wall Street forecasts, reflecting ongoing advancements in artificial intelligence, according to Rosenblatt Securities.

Analyst Perspective: Kevin Cassidy, an analyst at Rosenblatt, maintained a Buy rating on the stock and set a price target of $30.

The company posted revenue of $343 million for the quarter, outpacing the consensus estimate of $338.4 million. Adjusted earnings reached $0.49 per share, beating the anticipated $0.44 per share.

Growth Drivers and Outlook

• Advanced Computing: Revenue in this segment surged 52% year-over-year. This momentum is expected to continue as Penguin Solutions reduces its reliance on Meta Platforms Inc (NASDAQ: META), according to Cassidy.
• Enterprise Expansion: Cassidy anticipates that as the company broadens its enterprise client base and becomes less dependent on Meta, revenue growth will likely accelerate.
• Integrated Memory: This division saw a 41% increase in revenue compared to the previous year. Cassidy projects that this business could exceed $600 million in sales by fiscal 2026.

Management reaffirmed their full-year guidance, targeting approximately 6% revenue growth at the midpoint and adjusted earnings of about $2.00 per share.

With a slowdown in the LED segment, Cassidy highlighted that the robust performance in Advanced Computing and Integrated Memory provides compelling reasons to invest in the stock.

Stock Performance

As of Wednesday’s close, shares of Penguin Solutions had slipped 1.07% to $21.32.

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