PENG: Penguin Solutions Stock Plunges Over 20%. Why Are Traders Dumping the AI Player?

AI infrastructure builder issued forecast that undershot market consensus. But it did swing to a profit for the most recent quarter.

📉 Guidance Shock Sends Shares Spiraling

• Penguin Solutions’ wings got clipped on Wednesday as the stock PENG plunged 22% after management delivered a downbeat sales forecast for fiscal 2026. The company, which builds AI computing infrastructure, expects revenue growth of about 6%, well below last year’s 17% jump and short of analysts’ 10% target.
• CFO Nathan Olmstead said the outlook “reflects a broader set of potential outcomes” and a “back-end-loaded year,” market-speak for “things might pick up later.” Investors, however, weren’t in the mood for nuance, apparently, not in this scorching AI environment.
• The miss is hitting harder because AI infrastructure stocks have been on fire lately. Anything short of double-digit growth feels like a call for a punishing selloff.

💰 Pretty Solid Quarter Actually

• Lost in the guidance panic: Penguin swung to a $9.4 million profit, a sharp reversal from last year’s $24.5 million loss. Adjusted earnings clocked in at $0.43 per share, topping Wall Street’s $0.37 estimate.
• Revenue grew 9% year-over-year to $337.9 million, just a hair below the $342.1 million consensus. Still, it wasn’t enough to keep traders from focusing on the projected slowdown ahead.
• It’s the classic “good quarter, bad forecast” setup — and as every earnings-season veteran knows, Wall Street trades on the future, not the flashbacks.

🤖 AI Boom or AI Bust?

• Penguin builds the computing infrastructure that powers artificial intelligence systems — the data centers, cooling setups, and high-performance clusters that make all things run smoothly.
• With AI spending still booming across tech, Penguin’s muted guidance is spooking investors who assumed every AI-adjacent company was on a one-way rocket ride.
• The stock drop may prove overdone if growth does rebound in the back half of the year. But that’s the AI arms race and no one is safe. Exacerbating the drop is the company’s relatively tiny market cap of just $1.4 billion prior to the drop.