Georgetown, Texas, September 3, 2025
News Summary
TSS, Inc. has reported remarkable growth amid the ongoing AI infrastructure surge, with a stock increase of 176.3% over the past year. The company’s Q2 2025 financial report revealed a 262% revenue growth, driven by heightened demand for procurement services. A new facility in Georgetown has enhanced its capabilities significantly, yet TSSI faces challenges such as potential overvaluation and declining revenues in some sectors. Analysts stress the importance of diversifying revenue streams to ensure long-term sustainability.
Georgetown, Texas – TSS, Inc. (TSSI) has reported record growth as it continues to thrive in the AI infrastructure sector during the ongoing AI boom. The company’s stock has experienced a remarkable surge of 176.3% over the past year, significantly outpacing the overall decline of 1.7% within the industry. TSSI’s impressive growth is also highlighted in comparison to other engineering R&D service providers, such as Sterling Infrastructure (STRL), which saw a 160.1% increase, and AECOM (ACM), which managed a 27.9% uptick.
In its financial report for Q2 2025, TSSI announced a staggering 262% year-over-year revenue growth, reaching $44 million. This surge has primarily been driven by increased demand for procurement services and systems integration. Additionally, the adjusted EBITDA for the same quarter doubled to $4 million, while net income rose to $1.5 million. In the first half of 2025, the company recorded an astonishing revenue increase of 410% year-over-year, amounting to $142.9 million. Net income saw a similar rise, climbing 215% to reach $4.5 million, and diluted earnings per share nearly tripled to 17 cents.
TSSI’s financial health is further demonstrated by strong positive operating cash flow. A key factor contributing to this growth is the new 213,000 sq. ft. facility in Georgetown, which specializes in high-density AI rack integration. This facility has significantly increased its power capacity from 2.7 MW to 15 MW, with indications of plans for further scaling.
The AI-driven data center market is projected to expand rapidly, with estimates suggesting that the AI server market will hit $410 billion by 2027. TSSI aligns its business model with major growth trends in AI, global cloud spending, and modular computing solutions. Its strategic partnerships, including a multi-year agreement with a leading OEM, have enhanced the company’s revenue visibility and market standing.
Despite the promising growth, TSSI faces several challenges. The company’s current enterprise value-to-EBITDA (EV/EBITDA) ratio is 23.34x, notably higher than the industry average of 14.33x, indicating potential overvaluation concerns among investors. Notably, insider sales amounting to $677,196 by company executives have raised questions about short-term confidence in the stock. Following an 8.76% decline on September 2, 2025, TSSI’s stock has faced an overall drop of 18.5% over a span of four days as investors reassess valuation and associated risks.
Analysts emphasize the need for TSSI to diversify its revenue sources and manage customer concentration effectively to sustain growth. While procurement services have seen an astounding 572% increase in revenue, facilities management revenue has declined by 35% year-over-year. Additionally, consolidated gross margins have dropped from 37.3% to 17.8% as a result of having a higher proportion of lower-margin procurement services. Interest expenses also rose to $859,000 in Q2 2025, primarily due to costs associated with procurement transactions and new construction loans.
Looking ahead, TSSI has revised its full-year adjusted EBITDA growth outlook for 2025, now projecting a growth of at least 75% compared to 2024. Despite the ongoing challenges, the sentiment from TSSI’s earnings call remains optimistic, buoyed by the company’s robust operational positioning within the AI infrastructure market.
FAQ
What is the key driver behind TSSI’s growth?
TSSI’s growth is primarily driven by its procurement services and systems integration, alongside the recent expansion of its AI infrastructure facilities.
How has TSSI’s stock performed compared to the industry?
TSSI’s stock has surged 176.3% over the past year, while the overall industry has seen a decline of 1.7%.
What challenges does TSSI face despite its growth?
TSSI faces potential overvaluation concerns, declining facilities management revenue, and increased interest expenses, along with the need to diversify its revenue sources.
Key Features
| Feature | Details |
|---|---|
| Q2 2025 Revenue Growth | 262% year-over-year; $44 million |
| Stock Performance | 176.3% increase year-over-year |
| New Facility Size | 213,000 sq. ft. in Georgetown, Texas |
| Projected AI Server Market Growth | $410 billion by 2027 |
| Adjusted EBITDA Growth Outlook | At least 75% increase compared to 2024 |
Deeper Dive: News & Info About This Topic
HERE Resources
TSS, Inc. Shares Decline Amid Valuation Concerns
Additional Resources
- TradingView: TSSI Worth Buying?
- Wikipedia: TSS, Inc.
- TipRanks: TSSI Reports Robust Growth
- Google Search: TSS Inc
- Seeking Alpha: TSS AI-Fueled Growth
- Google Scholar: TSS Inc
- Ainvest: TSSI Growth Potential
- Encyclopedia Britannica: TSS, Inc.
- Ainvest: TSSI Shares Plunge
- Google News: TSS Inc
Author: STAFF HERE GEORGETOWN
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