PENG's Backlog Keeps Growing: Is Revenue Visibility Improving?

Penguin Solutions, Inc. PENG is seeing improving revenue visibility as AI-driven demand continues to outpace net sales growth, contributing to a growing backlog. The company exited the third quarter of fiscal 2026 with a very strong backlog, particularly in Integrated Memory, as data center-focused AI demand remained robust. Integrated Memory revenues jumped more than 111% year over year to $275 million, while AI-driven businesses represented 74% of total revenues and grew 104%.

Visibility is also strengthening in Advanced Computing. Management said bookings in the AI Infrastructure business generally convert into revenues within three to six months, providing an advantage heading into fiscal 2027. Penguin Solutions also indicated it has “pretty good visibility” into the first half of fiscal 2027 based on backlog and customer conversations.

The pipeline provides another visibility signal. MemoryAI appliances and CXL memory expansion cards generated both revenues and new bookings during the quarter, while the pipeline continued to strengthen across enterprise, sovereign AI and neocloud customers.

PENG's raised fiscal 2026 outlook further reinforces confidence in the demand environment, while its preliminary fiscal 2027 expectation is for roughly 30% net sales growth from the midpoint of the fiscal 2026 outlook. Overall, the growing backlog, predictable bookings-to-revenue cycle and strengthening pipeline suggest that the company's forward revenue visibility is indeed improving.

Rivals Benefiting From the Trend

Both Dell Technologies DELL and Vertiv Holdings VRT benefit from accelerating AI infrastructure demand, as rising orders, expanding backlogs and growing customer deployments strengthen forward revenue visibility.

Dell Technologies competes with Penguin Solutions across AI infrastructure, compute and data-center deployments, although its broader portfolio gives it a much larger scale. DELL exited first-quarter fiscal 2027 with a record $51.3 billion AI backlog, following $24.4 billion in AI orders, highlighting strong demand and visibility.

Vertiv Holdings contends with PENG, focusing on the growing opportunities in AI data center infrastructure. As AI deployments scale, demand for power, thermal management and integrated data-center infrastructure is increasing. VRT reported a strong backlog, accelerating pipeline momentum and capacity expansion, supporting future revenue growth visibility.

PENG’s Share Price Performance, Valuation & Estimates

Shares of Penguin Solutions have surged 107.6% over the past year, outperforming the Zacks Computer and Technology sector’s gain of 27.8%.

PENG’s 1-Year Price Performance

Image Source: Zacks Investment Research

From a valuation standpoint, PENG trades at a forward 12-month price-to-sales (P/S) ratio of 1.18, below the industry’s average of 3.93.

PENG’s Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for PENG’s fiscal 2026 and fiscal 2027 earnings is pegged at $2.60 and $3.40 per share, implying year-over-year growth of approximately 36.84% and 30.77%, respectively. Both estimates have been revised upward over the past 60 days.

Image Source: Zacks Investment Research

PENG stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research