On May 26, Micron Technology Inc. MU achieved a milestone with its valuation closing above the $1 trillion mark. The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to memory and storage devices.
The four major hyperscalers raised their AI capital expenditure budget to $750 billion in 2026 from $670 billion estimated earlier. This figure is set to cross $1 trillion next year and is likely to rise further beyond 2027.
This has resulted in more AI semiconductor sales which implies the need multiple AI memory chips and storage devices to operate. Flash memory technologies like DRAM and NAND are used in AI chips, enabling them to perform optimally.
However, the enormous application of AI in day-to-day life has pushed up the demand for memory chips and storage devices. In their last earnings reports, all four hyperscalers mentioned above highlighted a shortage of memory and storage chips, resulting in soaring prices of these products.
As a result, besides MU, a handful of other AI-enabled memory and storage device makers have benefited enormously. Their stock prices have skyrocketed year to date. However, massive demand, huge shortage of these devices and their current top Zacks Rank will ensure more upside over a long period.
These stocks are: Western Digital Corp. WDC, Sandisk Corp. SNDK and Seagate Technology Holdings plc STX. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of the above-mentioned four stocks year to date.
Image Source: Zacks Investment Research
Western Digital Corp.
Western Digital has been witnessing strong execution amid intensified cloud and AI demand. WDC saw strong data center demand and increased adoption of high-capacity hard disk drives (HDDs). This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.
As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. WDC is meeting this demand through close collaboration with hyperscalers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership.
Western Digital has an expected revenue and earnings growth rate of 34.6% and 71.6%, respectively, for next year (ending June 2027). The Zacks Consensus Estimate for next year’s earnings has improved 19.9% over the last 30 days.
Image Source: Zacks Investment Research
Sandisk Corp.
Sandisk — a leading flash and advanced memory technology innovator — is set to maintain its astonishing momentum. SNDK has benefited from the structural shift toward AI computing, which requires significantly more NAND flash storage per deployment compared with traditional workloads.
AI training models and inference applications generate massive data volumes that demand high-performance enterprise solid-state drives, while edge devices need greater storage capacity to support on-device AI features.
This creates a favorable demand environment where SNDK can command premium pricing for its advanced technology products while maintaining disciplined supply allocation. SNDK’s BiCS8 quad-level cell storage product continues to advance through qualification with two major hyperscalers. The extended joint venture agreement with Kioxia Corporation through December 2034 positions Sandisk favorably in the AI memory and storage space.
Sandisk has an expected revenue and earnings growth rate of more than 100%, each, for next year (ending June 2027). The Zacks Consensus Estimate for next year’s earnings has improved 69% over the last 30 days.
Image Source: Zacks Investment Research
Seagate Technology Holdings plc
Seagate Technology has been benefiting from AI-led storage demand, a robust technology roadmap anchored in Mozaic and HAMR and disciplined execution focused on converting demand into profitable growth and long-term value creation.
STX highlighted that the company is entering a “new era of structural growth” driven by strong AI-led demand, the rising adoption of Mozaic products and disciplined execution focused on expanding margins, cash flow and long-term value.
HDDs remain significantly more cost-effective for bulk storage—especially critical in hyperscale data centers supporting AI infrastructure. Seagate is well-positioned to capture this expanding opportunity through a technology strategy focused on increasing areal density rather than unit volumes, enabling a more capital- and manufacturing-efficient path to scale while improving cost and power efficiency per terabyte.
This supports STX’s target of mid-20% exabyte growth. Its Mozaic 4+ platform, a second-generation HAMR product, delivers up to 44TB per drive — more than 30% higher capacity than earlier versions — achieved with minimal changes to materials, while integrating advanced laser and photonics technology for precision manufacturing at scale.
Seagate Technology has an expected revenue and earnings growth rate of 33.9% and 76.9%, respectively, for the next year (ending June 2027). The Zacks Consensus Estimate for next year’s earnings has improved 30.3% in the last 30 days.
Image Source: Zacks Investment Research
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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Western Digital Corporation (WDC): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).