Penguin Solutions (PENG) Drops 23.7% After 2025 Guidance Cut and Major Business Exit—Is the Growth Story Intact?

Simply Wall St.10-12

Earlier this week, Penguin Solutions, Inc. reported fourth-quarter and full-year 2025 results, highlighted by an earnings beat but a miss on revenue expectations, the announcement of a US$75 million ...

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An important development is the company’s phase-out of its Penguin Edge business and the anticipated cessation of hyperscale hardware sales, which management indicated could create a significant headwind to overall sales growth in the coming year. We'll examine how the new revenue guidance and business transition are influencing Penguin Solutions' investment narrative and long-term outlook. AI is about to change healthcare. These 33 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.AdvertisementPenguin Solutions Investment Narrative Recap To be a shareholder in Penguin Solutions, you need to believe the company's pivot toward AI infrastructure, recurring services, and product innovation can offset the headwinds from winding down its Penguin Edge business and ending hyperscale hardware sales. The recent soft revenue guidance directly impacts the most important short-term catalyst, broader adoption of enterprise AI solutions, while also intensifying the risk around near-term revenue volatility as legacy revenues taper.\n  Of the company’s latest announcements, the new US$75 million share buyback stands out. While not a substitute for improved revenue visibility, the buyback signals management's confidence in the company's long-term prospects and capital position, but ultimately does not address the core risk of lumpiness from large project-based deals and customer concentration.\n  Yet, against the promise of recurring revenue, investors should be aware of the unpredictability created by high customer concentration and lumpy project schedules, which...\n Read the full narrative on Penguin Solutions (it's free!)Penguin Solutions is projected to generate $1.8 billion in revenue and $316.1 million in earnings by 2028. This outlook is based on an annual revenue growth rate of 10.4% and an increase in earnings of $331 million from the current earnings of -$14.9 million.Uncover how Penguin Solutions' forecasts yield a $28.25 fair value, a 34% upside to its current price.Exploring Other PerspectivesPENG Community Fair Values as at Oct 2025  Simply Wall St Community members provided six fair value estimates for Penguin Solutions from US$27.10 to US$156.06. As company guidance points to potential volatility from customer timing and project-based deals, opinions in the market continue to diverge, consider several perspectives before making up your mind.\nExplore 6 other fair value estimates on Penguin Solutions - why the stock might be worth just $27.10!Build Your Own Penguin Solutions NarrativeDisagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.A great starting point for your Penguin Solutions research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.Our free Penguin Solutions research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Penguin Solutions' overall financial health at a glance.Contemplating Other Strategies?Our top stock finds are flying under the radar-for now. Get in early:The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 24 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement.These 10 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.Trump's oil boom is here - pipelines are primed to profit. Discover the 22 US stocks riding the wave.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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