We recently published a list of Complete List of All AI Companies Under $2 Billion Market Cap. In this article, we are going to take a look at where Penguin Solutions, Inc. (NASDAQ:PENG) stands against other AI companies under $2 billion market cap.
It’s clear that AI holds immense promise but it comes with significant risks. Some of the concerns that the market has include overreliance on a few key players, shifts in demand toward smaller competitors, and the broader impact of AI-driven market trends on earnings and valuations. While AI offers opportunities, managing risks such as customer concentration, economic headwinds, and market volatility will be crucial for its sustainable growth and integration.
Navigating AI Expectations and Market Dynamics
On CNBC ‘Fast Money,’ a discussion between traders highlighted concerns about elevated expectations for AI, especially in the chip market, with NVDA as a prime example. Past patterns in the semiconductor giant’s stock suggest potential declines, with customer concentration being a significant risk. Some believe demand for high-end chips could shift to smaller semiconductor companies. They also discussed that broader market performance might improve as other sectors gain traction, especially during earnings season, which is expected to influence investor sentiment more than AI and GLP-1 trends.
They mentioned that the key risks for earnings include the strong U.S. dollar, rising rates, and policy uncertainties, which may impact large-cap companies. While recent PPI data offered some relief, the bond market remains firm, with 10-year yields approaching 5%. Expectations for CPI and PCE figures are mixed, with potential reacceleration seen as a headwind for markets in a higher rate environment. Earnings and economic data were considered critical factors to watch by the traders.
Our Methodology
For this article, we scoured our database as well as several ETFs and media reports to find all possible AI stocks under $2 billion. We then listed the stocks in ascending order of their market cap. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Penguin Solutions, Inc. (NASDAQ:PENG)
Market Capitalization: $1.07 Billion
Number of Hedge Fund Holders: N/A
Penguin Solutions, Inc. (NASDAQ:PENG) designs enterprise solutions globally with a focus on advanced computing, integrated memory, and optimized LED. It offers memory modules, storage solutions, and supply chain services for sectors like telecom, AI, and data analytics. The company also provides high-performance computing and AI solutions through Penguin Computing, and edge computing solutions through Penguin Edge.
Additionally, it offers fault-tolerant computing through Stratus and LED chips under the Cree LED brand. Penguin Solutions sells its products through direct sales, e-commerce, and several partners. Penguin Solutions brings over 25 years of AI infrastructure expertise to the partnership and supports AI deployments for major tech firms, enterprises, and academic institutions.
Penguin Solutions. (NASDAQ:PENG) recently announced a significant milestone as it reached a strategic partnership with SK Telecom and SK hynix to develop AI data center solutions. The collaboration, announced at CES 2025, follows SKT’s $200 million investment in Penguin Solutions. The partnership will add to the companies’ ability to deliver advanced AI infrastructure services across various markets. Combining Penguin Solutions’ Scyld ClusterWare software with SKT’s AI infrastructure management tools, the collaboration aims to improve AI cluster efficiency, memory solutions, and performance in high-performance computing environments.
Overall, PENG ranks 9th on our list of the 59 AI companies under $2 billion market cap. While we acknowledge the potential of PENG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PENG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.