Memory and AI data center stock Penguin Solutions (PENG -2.46%) has been on a tear in 2026, with a 188% year-to-date gain. It has also been in a bit of a slump, as it is down by more than 30% from the all-time high it set in early July. With that said, Penguin Solutions is scheduled to report its fiscal fourth-quarter results on Oct. 6, and a pre-earnings rally has taken shape.
It's an important quarter that will verify if the momentum in its memory business has continued. Furthermore, this earnings report wraps up Penguin Solutions' fiscal 2026, so guidance for fiscal 2027 may be in the cards. Here's what else investors should know.
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It's all about Integrated Memory
On the surface, the 48% year-over-year revenue growth rate Penguin Solutions delivered in its fiscal 2026 third quarter looks impressive. However, it's more meaningful when you zoom in on integrated memory, which is the largest segment of the business. Memory product sales reached $275 million, more than doubling year over year. The legacy businesses -- advanced computing and optimized LED -- posted single-digit revenue growth rates.
NASDAQ: PENG
Key Data Points
However, not all of the advanced computing segment is experiencing slow growth. Penguin Solutions' fiscal 2026 Q3 earnings presentation lumped some of the advanced computing segment's sales with its AI-driven business results. This combined entity, which includes all of the integrated memory segment, accounted for 74% of total sales and was up 104% year over year.
Investors should pay attention to the advanced computing unit to see if growth rates improved from the measly 4% year-over-year improvement in the most recent quarter. However, integrated memory is firmly in the driver's seat. Year-over-year growth should be high, but investors should also look for a sequential growth rate that is well above 10%.
Inference and agentic AI will boost the demand for memory products
Penguin Solutions CEO Kash Shaikh cited "inference and agentic AI workloads" as long-term tailwinds for its memory products. That bodes well for the integrated memory segment, and competing hyperscalers could accelerate demand even more.
Meta Platforms (META +0.73%) recently launched the Muse agentic AI app. Muse has experienced higher initial interest than ChatGPT did in its early days, with 2.8 million downloads globally in its first 12 days, and all of that traction will increase the demand for the memory required to handle intense agentic AI workloads.
That doesn't include the 46.2% compound annual growth rate that Grand View Research projects the enterprise agentic AI market will experience through 2030. In addition, Alphabet's (GOOG -0.11%) (GOOGL -3.80%) Gemini app reached 950 million monthly active users in the second quarter.
These tailwinds explain why Penguin Solutions raised its full-year guidance when it reported results for its fiscal 2026 third quarter. Investors will have to wait and see if the company manages to beat that updated guidance when it reports on Oct. 6.
