BofA initiates Penguin Solutions stock at Buy on AI growth

BofA Securities has given Penguin Solutions (PENG) a Buy rating with a target price of $100.00, based on an estimated 18 times its 2028 earnings per share of $5.43. The stock is currently trading at $71.57, up 266% year-to-date, indicating strong interest in AI infrastructure. Penguin Solutions provides memory and full-stack AI infrastructure to businesses, governments, and neocloud customers, contributing 78% of its sales, which grew 141% year-over-year.

The firm forecasts fiscal 2028 revenue of $2.87 billion and EPS of $5.43, both surpassing Wall Street's consensus. With seven analysts revising their earnings upwards for the upcoming period, BofA sees growth fueled by a persistent memory cycle and increasing demand for agentic AI, citing improved margins and faster time to first token in inference applications as positive factors.

The company's strong assets and intellectual property make it an appealing investment. Penguin Solutions recently reported fourth-quarter fiscal results exceeding expectations, with adjusted earnings of $1.00 per share and revenue hitting $567 million, surpassing analyst forecasts. Following the results, the company raised its guidance for the coming fiscal year, projecting revenue between $2,250.9 million and $2,597.2 million, a 40% year-over-year increase.

Other analysts have also raised their price targets for Penguin Solutions, maintaining a Buy rating. This optimistic outlook highlights the company's success in AI and computing segments.