Secret AI winners: Storage stocks are exploding as if it were 1999

What do Micron, Western Digital, SanDisk, or Seagate have in common? The storage manufacturers are soaring on the stock market like no other tech stocks.

(Image: Bro Crock/Shutterstock.com)

at 9:21 am CET

5 min. read

By

Nils Jacobsen

The AI revolution is producing winners and losers like in the heyday of early industrial capitalism – either you are part of the new era or part of a problem, as long-standing software champions have recently experienced. The stocks of Microsoft, Adobe, or Salesforce have recently come under significant pressure due to fears of disruption.

In the exact opposite camp are tech companies that played a key role in the first internet boom around the turn of the millennium: Micron, Western Digital, or Seagate. At the time, the Silicon Valley pioneers, who emerged from an era with Apple, Microsoft, Intel, or AMD, supplied hard drives and RAM, while SanDisk produced the first flash memory cards – the four US tech pioneers largely formed the physical backbone of the new internet economy.

Micron, Western Digital, Seagate, and SanDisk are the underestimated beneficiaries of the AI economy

About a quarter of a century later, the classic storage companies were lagging their former highs – then a complete revaluation occurred in the wake of the AI hype. Since last late summer, the stocks of American storage providers have been soaring like the proverbial flagpole.

The reason: Micron, Western Digital, Seagate, and also SanDisk are the big, hitherto underestimated beneficiaries of the AI economy. The unexpected boom is driven by a structural bottleneck that cannot be fixed with a software update: physical storage.

The driver here is not speculation but a new reality: hyperscalers like Microsoft, Meta, AWS, or Oracle are expanding their data centers at a pace that overwhelms the supply and planning horizons of the storage industry. AI thrives on data: models need to be stored, loaded, trained, and constantly fed. GPUs without sufficient memory are little more than expensive computing shells. The larger the models, the exponentially greater the demand for high-density, reliable enterprise storage solutions. Just yesterday, Meta CEO Mark Zuckerberg announced an increase in investments (Capex) to $115 to $135 billion for 2026 when announcing the quarterly results – significantly above analyst expectations.

Major supply bottlenecks in the NAND Flash market

The market is beginning to realize daily that storage is no longer an interchangeable commodity business but a strategic bottleneck. Especially with NAND Flash, power is extremely concentrated. Micron, Western Digital, SanDisk, and the South Korean conglomerates Samsung and SK Hynix, as well as Kioxia from Japan, effectively control the entire global production. The development and expansion of new capacities costs tens of billions of dollars and takes years. NAND cannot be “scaled up” when demand suddenly explodes, and that is precisely what is happening now.

This benefits not only classic flash manufacturers like Micron but also the long-declared-dead HDD specialists. Seagate and Western Digital are experiencing a renaissance because hyperscalers continue to rely on cost-effective, highly scalable hard disk storage for gigantic amounts of data. HDDs are, as Western Digital CEO Irving Tan recently put it, “the most reliable, scalable, and cost-effective storage solution” for many AI workloads. Analysts openly speak of supply shortages until at least 2027 – a rare environment with real pricing power.

Stock price explosions from 340 to 1366 percent within one year

The role of Micron is particularly exciting. As one of the few companies that supply both NAND and DRAM on a large scale, the 48-year-old US company from Boise, Idaho, sits at several neuralgic points of the AI value chain. Micron is not just a supplier but a strategic partner to hyperscalers. In an environment of limited supply, this means structural pricing power and above-average margins – a rare luxury in the semiconductor cycle.

The result: breathtaking stock performance. Since the beginning of the year alone, the four ultimate AI beneficiaries have gained between 52 percent (Micron) and 122 percent – in just four weeks. On an annual basis, the stock gains are even more incredible: Seagate shares rose by 341 percent, Micron by 391 percent, Western Digital by 489 percent, and SanDisk by a sensational 1366 percent. Whether the stock prices will literally continue to grow to the sky is likely to be shown by the current quarterly season. After Seagate yesterday reported a 22 percent increase in revenue and an impressive gross margin of over 42 percent, Western Digital and SanDisk are up today after the market close. (olb)

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This article was originally published in German. It was translated with technical assistance and editorially reviewed before publication.