Penguin Solutions on Tuesday reported accelerated growth through its latest quarter, driven by artificial intelligence and memory, prompting the company to raise its outlook.

Penguin Solutions posted fiscal fourth-quarter earnings of $1 a share, a 133% year-over-year rise, and net sales of $567 million, up 68%. Wall Street projected earnings of 77 cents a share and $521 million in net sales, according to FactSet.

Penguin Solutions' expansion has concentrated in its memory business, but the company has had to build up inventory and other working capital to support that growth, weighing on cash flow while profit margins remain under pressure.

Integrated memory sales hit $340.8 million in the fourth quarter, up 158% from the prior year and exceeding consensus estimates of $318 million. Fiscal-year memory sales reached $924 million, nearly doubling from the previous year's $464 million.

During the company's third-quarter earnings call in July, analysts projected Penguin Solutions' memory revenue to approach $300 million the following quarter. That came after Penguin Solutions reported a 111% jump in memory sales to $247 million at the time, driven by AI-related data-center demand.

The company reported fiscal-year adjusted earnings of $2.87 a share and net sales of $1.73 billion. Analysts expected adjusted earnings of $2.62 a share and $1.68 billion in net sales. Penguin Solutions previously issued higher-end guidance of $2.65 and $1.7 billion, respectively.

It used about $152 million of cash in operating activities for the fiscal year, compared with $109 million of cash generated a year earlier. The company's inventory nearly tripled year over year to $749 million, up from $255 million.

Penguin Solutions separately raised its fiscal 2027 revenue guidance to $2.43 billion at the midpoint, up from a preliminary estimate of $2.1 billion.

The guidance boost is driven by the company's accelerating AI infrastructure business, while its memory business "remains strong," CEO Kash Shaikh said in a news release.

Penguin Solutions stock rose 6% in after-hours trading after ending Tuesday's session up 5.7% to $64.21. Shares are up 228% this year, pacing their best annual performance on record, according to Dow Jones Market Data. The S&P 500 and tech-heavy Nasdaq Composite rose 0.5% and 0.4%, respectively.