Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
Penguin Solutions' price may be getting ahead of fundamentals, so it is now on a do-not-chase list. The stock has kept pumping, partly on retail hype from subscription sellers, and trades near 100x earnings after breaking out of a three-year consolidation range. It can keep running on hype alone. x.comÂ
Merlin was always highly speculative: buying a stock at 125x sales means accepting it could fall to 30x without any solid reason why it shouldn't. Its price spike came when it was being pitched like crazy on X. x.com x.comÂ
Penguin Solutions is riding a CXL mania that is only getting started. Six weeks of accumulation were followed by an engulfing, high-volume buying day and record earnings, putting the stock halfway to a $110 target. x.comÂ
Penguin Solutions' selloff on a Barclays note looks like a big overreaction to a strong quarter. Revenue hit a record $478.7 million, up 48%, with Integrated Memory up 111% and non-GAAP EPS up 79% to $0.84; it added four AI infrastructure customers, became an Nvidia AI Factory Specialized Partner, and raised FY2026 revenue growth guidance to 22% from 12%. Fundamentals and future growth are far too strong to justify this price, and the convertible was actually smart and bullish. x.com x.comÂ
Penguin Solutions should beat earnings by turning memory it stockpiled cheaply into expensive CXL systems after insane memory price increases. Its memory business grew 63% last quarter, and it spent $109.2M of cash on inventory in Q2. On June 1 it guided FY2026 sales and EPS to the high end of its ranges, and AI infrastructure demand, especially for local models, should be insane in H2. Rosenblatt raised its target to $75. With a 26.3% implied move, a beat looks about 60% likely. x.com x.comÂ
