We came across a bullish thesis on TSS, Inc. (TSSI) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on TSSI. TSS, Inc. (TSSI)’s share was trading at $7.54 as of April 15th. TSSI’s trailing P/E was 31.42 according to Yahoo Finance.
A data centre room with cloud technology, illustrating the enterprise application software services.
TSSI is emerging as a critical enabler of the ongoing AI-driven data center buildout, yet its stock price remains severely dislocated from its fundamentals. While market attention has shifted toward tariff noise, the AI revolution continues to fuel unprecedented investment in infrastructure. Data center construction has exploded from $10 billion in 2021 to over $120 billion projected for 2024, surpassing all other forms of manufacturing construction, and is unlikely to drop below $100 billion annually for the foreseeable future. TSSI, which procures, deploys, integrates, and maintains modular AI data center clusters, is positioned at the heart of this transformation. Though 96% of its current revenue comes from Dell—anchored by a multi-year contract that ensures near-term revenue stability—this tight relationship also hints at TSSI’s potential as a strategic acquisition target. The company’s broader opportunity lies in expanding beyond hyperscalers, serving mid-sized enterprises that demand turnkey AI infrastructure to manage proprietary data in-house.
TSSI’s growth trajectory has been remarkable, with revenue rising from $30.6 million in 2022 to $54.4 million in 2023 and surging to $148.1 million in 2024. For 2025, management is guiding for over $50 million in Q1 alone, and over $120 million for the first half, though it cautions that growth may be lumpy. The pace of demand is evident in the rapid expansion of its new facility—initially designed for 4.5 MW power capacity, now being upgraded to 15 MW by summer, with plans to reach 40 MW. TSSI has already flipped to GAAP profitability, posting $0.24 earnings per share in 2024, up from breakeven the year prior. Adjusted EBITDA has grown from $1.6 million in 2022 to $10.2 million in 2024, with 2025 expected to increase by at least 50%, even amid limited visibility. These are real financial results, not just hype, in a sector where many players are still burning cash.
Despite its position in a secular growth trend, TSSI trades at a mere 1.1x price-to-sales ratio, with a market cap of just $164 million. The stock sits at $7.34—the same price as in October 2024, when revenue was just $12.2 million for the quarter versus $50 million now. While TSSI once looked like a growth trap when it spiked to $16, today’s valuation reflects investor fear rather than fundamentals. With strong contract support, infrastructure scale-up, and optionality from future recurring revenue, TSSI offers a rare, asymmetric opportunity in the AI infrastructure space, with significant upside and limited downside.
TSS, Inc. (TSSI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held TSSI at the end of the fourth quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of TSSI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSSI 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 was originally published at Insider Monkey.