Penguin Solutions (Nasdaq: PENG) closed fiscal 2026 with record results and raised its outlook for the year ahead. Fourth-quarter net sales reached $567 million, up 68% from a year earlier, and full-year sales came to $1.73 billion, up 26%. Management now expects fiscal 2027 sales of about $2.43 billion at the midpoint, growth of roughly 40% give or take 10 points, with non-GAAP earnings of $4.45 a share. Three months ago its preliminary view was $2.17 billion.
The company that used to be SMART Global Holdings now calls itself “the AI Factory Platform Company,” and the release leads with neocloud wins and AI infrastructure. The segment table tells a different story about where fiscal 2026 came from.
Memory Did the Lifting
Integrated Memory brought in $341 million in the fourth quarter against $132 million a year earlier, a 158% jump, and made up about 60% of the quarter’s sales. For the full year the segment roughly doubled, to $924 million from $464 million. Penguin says the memory business remains strong. It’s putting money into CXL memory expansion products to support stronger bookings, and it signed a new supply arrangement with a leading memory maker to get more parts.
Advanced Computing, the segment that holds the AI infrastructure business, grew 11% in the quarter to $154 million. For the year it fell 14%, to $559 million from $648 million, and the company is also winding down its Penguin Edge product line, which weighs on the comparison. The LED business slipped about 3% for the year. Put plainly, the record year was a memory year.
The AI Side Has to Deliver
The raised guide leans on AI infrastructure. Penguin added six AI infrastructure data center customers in the fourth quarter, four of them neoclouds, and 17 over the year, while 12 existing customers expanded. The deals it chose to describe are large. One neocloud holding $10 billion of contracted compute from a leading AI lab hired Penguin to deploy and run a 36,000-GPU AI factory in Norway. A publicly traded neocloud with more than $3 billion in signed multi-year contracts brought it in for deployment and round-the-clock operations on its ClusterWareAI software. A third, backed by a large South Korean technology company, picked Penguin to design, build and manage an NVIDIA GB300 NVL72 platform.
None of those customers is named, and most of the revenue from them sits ahead in time. That’s why fiscal 2027 matters more than fiscal 2026 for this story. If the AI factory work converts on schedule, Advanced Computing finally carries its weight. If memory pricing cools first, a 40% growth rate gets harder to defend.
Read the Cash Flow Before the EPS
GAAP diluted earnings were $1.29 a share in the quarter, against $0.11 a year earlier. That figure includes a $57.6 million income tax benefit and a $33.2 million inducement expense tied to converting older notes. The cleaner number is non-GAAP: $1.00 against $0.43.
Growth is also eating cash. Operating cash flow was negative $163 million in the fourth quarter and negative $152 million for the year, compared with positive $109 million in fiscal 2025. Inventory nearly tripled to $749 million and receivables rose to $796 million, partly offset by much higher payables. In the quarter Penguin sold $750 million of zero-coupon convertible notes due 2031, repaid $295 million of debt and $100 million on its credit line, and bought capped calls. Margins are moving the wrong way as well: non-GAAP gross margin was 28.8% in the quarter, down from 30.9% a year earlier, and the fiscal 2027 guide points to about 28%.
Penguin named a new chief financial officer the same day. Stephen Cumming, previously CFO of Edgio and Cambium Networks, with earlier CFO roles at Atmel, Fairchild Semiconductor and National Semiconductor, takes over from interim CFO Aaron Johnson. Working capital will be the first thing on his desk.
Fiscal 2027 is where the AI factory has to show up in the numbers.