Western Digital, Sandisk Dominate AI-Driven Storage Gains

This year certainly wasn’t an easy one in the stock market given the early tariff-related volatility. Yet as time carried on (quite favorably for investors), the year should go down as one of the better market environments in history.We saw broad gains across the board in a variety of industries, but one area of the market really stood out.The Zacks Computer – Storage Devices industry has been one of the top-performing technology segments in 2025, advancing nearly 70% year-to-date, significantly outperforming the S&P 500’s 16.5% gain. The primary catalyst has been explosive growth in artificial intelligence workloads, which require massive amounts of high-capacity, high-performance storage for training, inference, and archival purposes.Image Source: Zacks Investment ResearchData center operators and hyperscalers continue to expand infrastructure at an unprecedented pace, driving sustained demand for both hard disk drives (HDDs) and NAND flash-based solutions.Will Computer Storage Stocks Continue Their Dominant Run?Like most other pockets of the market, storage stocks suffered early in the year amid widespread volatility. In fact, by early April, leading companies Western Digital and Sandisk were down 20-30% each on the year.Fast-forward to December, and not only has Western Digital nearly quadrupled, but its spun-off flash sibling, Sandisk, has rocketed nearly 500% since its relisting. If you're like me—someone who remembers the dot-com bubble but sees real substance this time—you're probably wondering: Is this just hype, or the start of a multi-year boom?Spoiler: It's the latter, fueled by AI's insatiable hunger for data storage. What ties this all together? AI isn't just chatbots and image generators anymore; it's exploding into data centers, edge computing, and hyperscale clouds that guzzle exabytes of storage like it's going out of style.The Zacks Computer – Storage Devices industry's tailwinds are just getting started. AI-powered storage markets are exploding—from $30.27 billion in 2025 to a projected $187.61 billion by 2035 at a 20% compounded annual growth rate (CAGR). We're talking edge AI for autonomous cars, cloud refreshes for LLMs, and cybersecurity-driven backups.Western Digital Corporation WDC, a leader in enterprise HDDs and nearline storage, currently carries a Zacks Rank #1 (Strong Buy). The stock has delivered a remarkable 260% return year-to-date, reflecting sharp upward revisions to earnings estimates.Image Source: StockChartsAnalysts now project fiscal 2026 adjusted EPS of $7.66, representing over 55% growth from the prior year. Revenues from the Cloud end segment, which account for nearly 90% of Western Digital’s revenue, grew 31% in the most recent quarter. Innovations such as UltraSMR and heat-assisted magnetic recording have enabled the company to ship industry-leading 30TB+ drives tailored for AI data lakes. Strong free cash flow generation and a fortified balance sheet provide additional financial flexibility as the company capitalizes on multi-year hyperscaler buildouts.Image Source: Zacks Investment ResearchSandisk Corporation SNDK, Western Digital’s flash memory business that was spun off and relisted in February 2025, has been an even stronger performer, rising nearly 500% since its debut and earning its own Zacks Rank #1 (Strong Buy).Image Source: StockChartsConsensus estimates call for fiscal 2026 EPS growth of over 300%, supported by robust NAND pricing and accelerating exabyte shipments. SanDisk’s advanced BiCS8 QLC technology is seeing strong adoption in high-density enterprise SSDs and embedded storage for AI edge devices. Recent inclusion in the S&P 500 is expected to trigger meaningful passive inflows, while a forward P/E multiple in the mid-teens appears attractive given the structural growth tailwind.Image Source: Zacks Investment ResearchBottom LinePersonally, as a dad juggling family photos on my external drive, I appreciate how these companies make our digital lives seamless. But as a strategist, the math is irrefutable: AI isn't a fad, it's reshaping storage forever.For investors seeking exposure to the ongoing AI infrastructure buildout, Western Digital and Sandisk stand out as high-conviction ideas. Both carry Zacks Rank #1 (Strong Buy) ratings, benefit from favorable earnings revisions, and are positioned to capture a disproportionate share of the coming storage spending wave.Disclosure: The author may own shares in the aforementioned securities.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis Report Sandisk Corporation (SNDK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks