The unprecedented global "AI computing race" to expand infrastructure tied to AI training/inference has Wall Street giants like Morgan Stanley declaring a "storage super cycle." Surging demand for enterprise hard drives has propelled storage leaders Seagate Technology (STX.US), SanDisk (SNDK.US), and Western Digital (WDC.US) to triple-digit stock gains this year, far outpacing major global indices. While memory chip leaders SK Hynix, Samsung Electronics, and Micron Technology have also rallied on AI momentum, their performance trails the storage trio's explosive growth.
Compiled data shows Western Digital and Seagate have soared over 200% year-to-date, trading near all-time highs as cloud giants (Alphabet, Microsoft, Amazon, Tencent, Alibaba) collectively raise AI data center capex. Global AI infrastructure investment could reach $3-4 trillion by 2030, exponentially boosting demand for enterprise HDDs and data center SSDs.
Western Digital shares jumped 12% in early Friday trading after issuing Q2 profit guidance well above Wall Street's elevated expectations. The AI infrastructure boom intensified after Nvidia's GTC conference and big tech's commitment to massive data center investments, with Nvidia's market cap surpassing $5 trillion.
Industry-wide DRAM/NAND price surges, OpenAI's $1 trillion infrastructure deals, and TSMC's upgraded 2025 revenue forecast to mid-30% growth have reinforced the long-term bull case for AI GPUs, ASICs, HBM, and cooling systems. Generative AI applications are creating "astronomical" computing demands, which Nvidia CEO Jensen Huang identifies as the company's largest future revenue source.
Western Digital, Seagate and SanDisk are leading this "storage super cycle" through multiyear supply contracts with hyperscalers. JPMorgan analysts note Western Digital's five major clients have locked in NAND supply through 2026, unwilling to risk capacity shortages amid exploding AI workloads. Seagate shares rose 20% after beating Q2 forecasts, making them the S&P 500's second-best performer behind Robinhood.
The storage rally stems from AI data centers requiring expansion across all three storage tiers (hot/warm/cold), compounded by HDD oligopolies' supply discipline and NAND recovery. Western Digital's Ultrastar DC series dominates high-capacity nearline HDDs for AI data lakes, while Seagate's HAMR technology addresses cloud providers' cost-per-TB pain points. SanDisk's NVMe SSDs handle high-throughput AI training tasks.
Wall Street sees the supercycle extending through 2027. Morgan Stanley notes SK Hynix's sold-out HBM production signals prolonged supply tightness, reminiscent of 2017-2018's memory boom. Nomura predicts meaningful capacity expansion won't occur until late 2027.
Analysts are raising targets: Citigroup lifted Western Digital's price objective to $180, citing seven customers committed through 2026, while Cantor Fitzgerald sees $200 as HDD demand intensifies. Morgan Stanley calls this a "real-time storage bull market," boosting Seagate's target to $270 as order backlogs stretch into 2027.