Power Solutions International Poised for 75% Upside
If you have wondered whether Power Solutions International’s (NASDAQ: PSIX) stock rally is played out or has room to run, the charts say this market is strengthening and has room to run. A lot of room to run.
The company's weekly chart is a textbook example of a bull market gaining strength. It shows the potential to rise by another 75% before reaching a significant top.
Bullish signals include the price action, which is trending strongly higher, the MACD, which is robust and converging with the highs, and volume, which is also strong, rising, and converging with the highs.
Together, they amount to a strong technical signal; the only problem is that the price is pulling back in mid-July.
However, some interesting possibilities emerge, assuming the market is entering a consolidation, potentially forming a triangle or flag pattern. The market will create a continuation pattern in that scenario and bring the full magnitude of its move into view.
A bullish flag pattern is typically the middle or within the mid-range of a larger movement, which, in this case, could extend by an amount equal to the rally that preceded it. That’s a solid $60 movement, potentially putting this market at $140 by the end of this year.
Power Solutions International Is an AI Play With Legs
Power Solutions International is an outside-the-box AI play whose business is essential to the industry: power and power management. Its custom engines and power solutions are used for critical backup power supply, seamlessly integrated into the data center infrastructure. That is a vital element in an industry reliant on steady, reliable power, and PSIX doesn’t stop there.
Power Solutions International also provides power management equipment and services, essential for the power-consuming data center industry. Other business drivers include its impact on end-user compliance requirements, such as environmental.
PSIX solutions can be used with multiple fuel types, including natural gas, propane, and biofuel. It is also a diversified business model with operations spanning industrial, transportation, and power system markets.
The critical takeaway is that Power Solutions International’s revenue growth accelerated under the influence of AI. The Q1 results revealed a 42.3% year-over-year (YOY) increase, which outperformed MarketBeat’s consensus by 2500 basis points and led management to provide strong guidance.
The consensus is for revenue growth to continue sequentially, sustaining a high-double-digit YOY pace through the end of the year, and is likely too cautious. The consensus is expected to be low due to the low number of analysts covering the stock and the amount of revision activity in 2025.
The analysts and institutional activity is tepid in 2025 but offers potential for increased activity. MarketBeat tracks a single analyst and reports less than 25% institutional ownership. The single analyst rates the stock as a Buy, with more Buy ratings expected. Institutions have been buying on balance in 2025, a trend likely to strengthen over the coming quarters.
Power Solutions International Makes Profits Today
Unlike many small-cap tech stocks, this one makes money today. The company’s margins are not only positive in 2025 but are also widening under the influence of revenue leverage, operational improvement, and spending controls. Gross margin widened by 270 basis points in Q1, while SG&A grew much slower than revenue, resulting in net income increasing by nearly 170% and adjusted EPS just over eight cents, 37 cents higher than expected.
Cash flow is also positive, allowing PSIX to reduce debt in Q1. The company’s cash position is also solid, leaving equity up roughly 30% and the business in a flexible financial position. Management aims to leverage the balance sheet, using debt to fund growth and drive value gains for shareholders.
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