By Shashwat Chauhan
(Reuters) -Shares of data storage companies such as Seagate and Western Digital have sharply outperformed the broader market this year, powered by the staggering demand for hard drives in the global race to scale up AI-related infrastructure.
Both Seagate and Western Digital stocks are trading near record highs, having surged more than 200% this year on the artificial intelligence boom.
Western Digital gained 10.5% in premarket trading on Friday after it forecast second-quarter earnings above Wall Street estimates.
“The fact that WDC has secured purchase orders extending through CY26 with five of its largest customers is a clear indication that customers are unwilling to risk falling short on storage capacity as AI-related demand continues to march higher,” J.P.Morgan analysts said in a note.
Earlier this week, rival Seagate Technology also forecast second-quarter revenue and profit above estimates late Tuesday. Its shares have surged 20% since, and were up 1.7% on Friday.
Seagate and Western Digital are the second and third-highest percentage gainers this year on the S&P 500, only behind trading platform operator Robinhood.
Smaller rival Sandisk, spun out of Western Digital in February, has also seen a five-fold jump in its stock since listing. Shares of the company, which will report its results on November 6, were up 3.1% on Friday.
The S&P 1500 technology hardware, storage and peripherals sector – which houses all three companies – has jumped more than 11% for the year and hit a record high on Thursday.
Tech giants Alphabet, Microsoft, Meta and Amazon all announced plans for higher annual capital expenditures as they pour money into chips and data centers.
Global AI-related infrastructure spending could reach $3 trillion to $4 trillion by 2030, Goldman Sachs estimates.
“If you went back twelve months or twenty-four months and you asked somebody about AI, they wouldn’t have talked about hard disks… It’s exciting,” said Martin Frandsen, portfolio manager at Principal Asset Management.
(Reporting by Shashwat Chauhan and Medha Singh in Bengaluru; Editing by Leroy Leo)
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