Why Lucid Sees AI Tailwinds Driving Long-Term Upside for TSS Despite Near-Term Revenue Drop

On December 1, Lucid Capital Markets initiated sum of TSS with a Buy standing and a $15 terms target, implying astir 56% upside from the $9.63 terms cited astatine the clip of the report.

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Lucid’s transportation is simple: TSS is leveraged to the AI data-center buildout arsenic a systems integrator that procures hardware, builds server racks, and maintains networks for endeavor customers, benefiting from a choky commercialized narration with Dell, a large supplier of AI-enabled servers. The steadfast expects header gross to diminution by ~24% successful 2026 arsenic the institution laps unusually large, low-margin procurement volumes from aboriginal 2025. Still, it argues maturation should proceed successful the higher-margin systems integration and facilities absorption segments.

Valuation is the hostility point. Lucid notes TSS trades astatine little than 1x connected EV/Sales with constricted organization ownership, suggesting under-recognition.

TSS, Inc. (NASDAQ:TSSI) provides data-center services and AI/HPC infrastructure integration: procurement, rack buildout, and lifecycle services for endeavor and exertion customers, with operations intimately tied to Dell’s server ecosystem.

While we admit the imaginable of TSSI arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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Disclosure: None.