AI power demands have been a big tailwind for Power Solutions International, but the stock is trading as if all those tailwinds have disappeared.
A low P/E ratio and excellent earnings growth make the decline more confusing.
The company even has a quick ratio of 2.28, which indicates a strong financial position with little debt.
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International energy solutions(NASDAQ:PSIX) It caught the artificial intelligence (AI) tailwinds in early 2024 and took advantage of them to achieve share price gains that exceeded 5,950% in mid-September 2025. Since reaching that peak, the share price has fallen 47%, in part due to market concerns about the energy systems maker’s accounting practices.
Sure, concerns about overblown revenue growth may change the bullish narrative on the stock, but the company still has potential. For example, insiders still own about 80% of the stock, indicating continued confidence from the people at the top. The company also continues to benefit from the artificial intelligence (AI) trend and continues to report tremendous revenue growth. Add in that the stock doesn’t have the kind of lofty valuation that has commonly been a concern for AI stocks. Its price-earnings ratio is only 11.3.
Those reasons and more suggest that the recent price decline may present a long-term buying opportunity. Let’s take a closer look.
Image source: Getty Images.
The company develops and produces power systems for industrial, energy and transportation applications. While Power Solutions International expects demand from the industrial and transportation markets to remain stable, it projects significant growth in data center demand. Basically, as more AI data centers are built, Power Solutions International should see increasing demand for its products.
In the third quarter, Power Solutions International sales increased 62% year over year to $203.8 million. Power systems sales increased by $85.3 million, while industrial and transportation end-market sales decreased by $4.7 million and $2.6 million, respectively.
Management did not provide exact breakdowns of how much each of these three segments earned in the quarter. However, an increase of $85.3 million in sales of existing power systems against a total of $203.8 million in revenue suggests that data centers now provide the majority of Power Solutions International’s top line.
Power Solutions will be well positioned to accelerate its revenue growth rates as more data centers are built. Additionally, AI spending by large technology companies is also expected to increase in 2026, which should lead to greater demand for Power Solutions International’s services.
Power Solutions International has a strong balance sheet that includes $318.9 million in total current assets and $139.9 million in total current liabilities. That equates to a quick ratio of 2.28, indicating that Power Solutions International can easily cover its financial obligations. In general, a quick ratio of 1.0 or higher is considered good.
The company told investors it has $49 million in cash and cash equivalents and $96.7 million in total debt. You have enough money to finance additional investments while minimizing interest payments.
Power Solutions International has a strong financial profile and is a key beneficiary of the hottest industry right now. AI still has a tailwind for several years as autonomous vehicles, robots, AI agents and cloud platforms demand more energy.
The main issue that has prevented Power Solutions International’s stock from continuing to rise is whether its numbers are real or inflated. The concern is not without precedent, as the company’s former CEO was charged with accounting fraud in 2019. The company reached a settlement with the SEC in 2020 that resulted in the firing of some of Power Solutions International’s executives.
The company released its third-quarter report in early November, with management forecasting 45% sales growth for the full year despite reporting sales growth figures of 62% in the third quarter and 74% in the fourth quarter. Some investors are calling for an investigation because the growth numbers don’t seem to add up. Investors are wondering why sales have suddenly fallen significantly after two quarters of accelerating growth. It’s also worth noting that Power Solutions International reported 42% revenue growth in the first quarter, which is more in line with the full-year forecast.
It’s a bit shocking that the company forecast only 45% sales growth without much explanation. It has still delivered strong growth for the year, but investors who are on the fence may want to wait for guidance for 2026. If the company projects much lower growth rates for 2026, especially if AI stock remains hot due to strong sales, the bears will become much louder.
Despite the 47% drop from 52-week highs, the stock is still trading about 114% higher in 2025 and is up more than 1,770% over the past three years. It has been a great growth stock. Interestingly, its P/E ratio now appears too low given its positioning to benefit from the AI ​​industry. Hypergrowth is still on the menu as big tech companies increase their spending. The crisis seems exaggerated at current levels.
It’s worth noting that insiders have sold far more shares than they bought this year, but that could be a reflection of longtime shareholders finally reaping some profits from the two-year share price acceleration. Insiders still own approximately 80% of its total shares.
The people who know the most about the company still own the majority of its shares. If accounting fraud were rampant, insider selling would probably be much higher, since it would make no sense for insiders to own 80% of the stock.
Investors who are still cautious can wait until the company releases its fourth-quarter results and offers guidance for 2026 before deciding whether to buy or not. Power Solution International’s long-term growth prospects should become clearer by then. However, the company is in an excellent position to capitalize on growing demand for AI and has a healthy balance sheet. If sales start strongly in 2026 and the forecasts are good, investors will forget about the current drama.
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Marc Guberti has no position in any of the securities mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
1 Growth Stock Down 50% to Buy Right Now was originally published by The Motley Fool
