Penguin's Memory Solutions Poised For 20%-30% Growth, Analyst Eyes Soaring AI Demand, Key Partnerships

Rosenblatt analyst Kevin Cassidy reiterated the Buy rating on Penguin Solutions, Inc. (NASDAQ:PENG), with a price forecast of $27.

Cassidy shared a positive takeaway following recent investor meetings with the leadership team at Penguin Solutions, including CEO Mark Adams, CFO Nate Olmstead and Investor Relations Manager Suzanne Schmidt.

The analyst writes that the discussions strengthened confidence in the growing demand for Penguin's software and services within the enterprise market.

According to management, one of the key advantages of Penguin's software lies in its ability to anticipate GPU failures while maintaining high GPU utilization levels of around 95%.

Also Read: Pillar Of America’s Cyber Security Lost Funding Temporarily: What Investors Should Know About CVE Program, Funding Extension

The analyst highlighted Penguin's extensive experience—over 25 years in high-performance computing (HPC) and artificial intelligence (AI)—as a major asset, especially as large corporations, including Fortune 500 companies, move toward developing their own on-premise AI systems.

In addition to its software capabilities, Cassidy writes that the company's custom memory solutions are gaining traction. He noted that demand for these products is rising, with expected growth of 20% to 30% this year.

This growth is driven by AI's increasing need for high-density, high-performance memory—an area where Penguin's Smart Modular brand has built a solid reputation over nearly four decades.

The analyst noted that, according to Penguin Solutions’ management, a growing number of customers are beginning to recognize a clear path to achieving a return on investment (ROI) from their AI initiatives.

Many of these organizations lack the necessary expertise in data center infrastructure, which is where Penguin comes in as a strategic enabler.

Penguin's offerings help bridge this gap by supporting the deployment of complex AI systems on-premises, especially for customers with limited experience managing such infrastructure, Cassidy notes.

The company is collaborating with SK Telecom Co., Ltd. (NYSE:SKM) and providing solutions for emerging neocloud players, such as Voltage Park, helping them build scalable AI infrastructure.

Additionally, Penguin is working with Celestial AI, which specializes in optical memory technologies, and has engagements with major companies like Meta Platforms, Inc. (NASDAQ:META) and Dell Technologies Inc. (NYSE:DELL) —the latter focuses on facilitating last-mile delivery of enterprise AI solutions.

On top of that, Cassidy adds that Penguin is in discussions with a leading systems integrator, which, if finalized, could further expand its reach in enterprise and cloud markets.

Penguin Solutions' management believes that the most significant impact of tariffs will likely be on end-user demand rather than directly on their operations, says Cassidy.

Price Action: PENG shares are trading lower by 3.22% to $15.91 at last check Thursday.

Read Next:

• Whistleblower Says DOGE May Have Caused Major Cybersecurity Breach At US Labor Agency

Photo: Shutterstock