Penguin Solutions Inc. (PENG) is making steady progress in AI while gradually breaking free from its dependence on a single massive customer, and analysts are taking notice.

The company delivered better-than-expected fiscal first quarter results, with revenues hitting $343 million against consensus estimates of $338.4 million. Non-GAAP earnings came in at 49 cents per share, topping the Street's expectation of 44 cents.

Diversification Paying Off

Rosenblatt Securities analyst Kevin Cassidy maintained his Buy rating and $30 price target, highlighting what really matters here: Penguin Solutions is successfully shifting away from Meta Platforms (META). Advanced Computing revenues surged 52% year-over-year, and that momentum should continue as the customer mix broadens.

"We expect that as the company expands its enterprise customer base and become less dependent on Meta deployments, revenue growth will accelerate," Cassidy noted.

Memory Business Gaining Traction

The Integrated Memory segment isn't sitting still either, posting 41% year-over-year growth. Cassidy sees this business potentially exceeding $600 million in fiscal 2026.

Management stuck with their full-year guidance, projecting roughly 6% revenue growth and non-GAAP earnings around $2.00 per share. With the LED business decelerating, Cassidy sees the growth story firmly centered on Advanced Computing and Integrated Memory.

Shares of Penguin Solutions dipped 1.07% to $21.32 on Wednesday following the announcement.