Bank of America initiates buy rating on Penguin Solutions amid AI boom
The bank sets a $100 price target on the AI infrastructure company, implying potential upside of approximately 40% on the back of agentic AI demand
Bank of America has started covering Penguin Solutions with a Buy rating and a $100 price target. The bank initiated coverage on October 9, 2026, and the target points to potential upside of approximately 40% from the stock’s prior close of around $71.57.
The pitch rests on two pillars: the growth of agentic AI and Penguin’s expertise in high-performance computing.
The call arrived just days after Penguin posted a quarter that made its existing analysts look conservative.
The numbers behind the call
Penguin Solutions, which trades on the Nasdaq under the ticker PENG, reported fiscal Q4 2026 results on October 6. Net sales came in at $567 million, a 68% jump year-over-year.
Non-GAAP earnings per share landed at $1.00, clearing the consensus estimate of approximately $0.77.
Management also raised its fiscal 2027 revenue outlook to about $2.43 billion at the midpoint. That figure implies growth of around 40% for the year ahead.
AI-related work now makes up 78% of Penguin’s sales, and that segment grew 141% year-over-year.
Penguin is deploying a 36,000-GPU AI factory in Norway for a neocloud customer. That client holds $10 billion in contracted compute from a leading AI lab.
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In the trading sessions after the earnings release, the stock moved between $71 and $77 in early October. Bank of America’s $100 target sits well above that band.
Who else is in the bull camp
Bank of America is not alone in its enthusiasm. Several firms have maintained or raised Buy ratings on the stock following the results.
Rosenblatt has a $100 target, matching Bank of America’s figure. Goldman Sachs adjusted its target to $85.
Across the analysts tracked in the research, targets range from $85 to $100.
From memory maker to AI factory builder
Penguin Solutions evolved from Smart Global Holdings, building out a portfolio of GPU-accelerated systems and memory solutions over time.
Today it focuses on AI and high-performance computing infrastructure, GPU servers, and managed services. Its signature offering is the fully managed AI factory: a turnkey setup where Penguin designs, deploys, and runs the computing environment for clients.
A key piece of the story is Penguin’s relationship with NVIDIA. The company has partnered with the chipmaker for over 25 years.
What this means for investors and the AI buildout
Bank of America’s thesis centers on agentic AI, meaning AI systems that take actions and complete multi-step tasks rather than simply answering prompts.
With 78% of sales tied to AI and that segment growing 141%, the company’s fortunes are now closely linked to how quickly AI labs and neoclouds keep spending.
Investors will likely focus on whether the company can hit its raised fiscal 2027 guidance of about $2.43 billion, representing roughly 40% growth after a 68% quarter.