When the physical storage of data centers can no longer withstand the "AI faith," the storage "super cycle" has already begun

According to the Zhitong Finance APP, in the unprecedented "AI computing power race" closely linked to global expansion and AI training/inference-related infrastructure, major Wall Street firms like Morgan Stanley are proclaiming that the "storage supercycle" has arrived. The surge in demand for enterprise-level storage hard drives has driven the stock prices of data storage giants such as Seagate (STX.US), SanDisk (SNDK.US), and Western Digital (WDC.US) to increase by over three digits this year, significantly outperforming the US stock market and even the global stock market.

The three global leaders in memory chips, SK Hynix, Samsung Electronics, and Micron Technology, as well as leading memory chip/storage product companies from China, have also shown strong stock performance this year, continuing the AI-driven "super bull market" with record highs. However, compared to the triple-digit gains of giants like Seagate, their performance appears slightly weaker.

Latest stock price compilations show that under the unprecedented "AI frenzy," the stock prices of Seagate and Western Digital have soared over an astonishing 200% this year, currently near their historical highs. According to top investment institutions on Wall Street, the stock price momentum of these three enterprise-level hard drive storage giants is far from over. Cloud computing giants (Google's parent company Alphabet, Microsoft, Amazon, as well as Tencent and Alibaba) have collectively raised their capital expenditures for AI data centers, with global AI infrastructure investment expected to reach $3-4 trillion by 2030, directly "exponentially boosting" the demand for enterprise-level HDDs and data center enterprise-level SSDs.

In early trading on Friday, Western Digital's stock price rose over 12%. With this strong upward momentum, it reached a new historical high shortly after the opening, following the company's significantly higher-than-expected second-quarter earnings forecast compared to Wall Street's continuously revised high expectations.

After Jensen Huang released a series of positive catalysts at the GTC conference, and Microsoft, Google, and Facebook's parent company Meta signaled their continued massive investments in AI computing power infrastructure for large-scale AI data center construction during their latest earnings meetings, the global AI chip industry chain has entered a long-term bull market atmosphere of "bullish frenzy." Notably, "AI chip superpower" NVIDIA (NVDA.US) has surpassed and stabilized its market capitalization at $5 trillion, becoming the first company in the world to reach a market value of $5 trillion.

Recently, the prices of high-performance DRAM and NAND series storage products have continued to rise sharply. Additionally, the world's highest-valued AI startup, OpenAI, has secured over $1 trillion in AI computing power infrastructure deals, and "chip foundry king" TSMC has reported exceptionally strong earnings that exceeded expectations and raised its revenue growth forecast for 2025 to the mid-30% range. These factors have significantly reinforced the "long-term bull market narrative logic" for AI GPU, ASIC, HBM, data center SSD storage systems, liquid cooling systems, core power equipment, and other AI computing power infrastructure sectors.

The AI computing power demand driven by generative AI applications and AI agents at the inference end is described as "starry seas," expected to drive the AI computing power infrastructure market to continue showing exponential growth. The "AI inference system" is also considered by Jensen Huang to be the largest source of revenue for NVIDIA in the future The global demand for AI computing power continues to surge, coupled with the increasingly large AI infrastructure investment projects led by the U.S. government, and technology giants are continuously pouring huge sums into building large data centers. This largely indicates that for long-term investors who are fond of NVIDIA and the AI computing power industry chain, the sweeping "AI faith" around the world has not yet concluded its "super catalysis" on the stock prices of computing power leaders. They bet that the stock prices of AI computing power industry chain companies led by NVIDIA, TSMC, Micron, SK Hynix, Seagate, and Western Digital will continue to demonstrate a "bull market curve."

Western Digital, Seagate, and SanDisk, the three major storage chip giants leading the "storage super cycle"

"Western Digital Corporation (WDC) has signed large-scale enterprise-level NAND storage product procurement orders with its top five customers that extend to the end of the 2026 calendar year. This clearly indicates that as GPU computing and storage demand closely associated with massive AI training/inference continues to rise, these major customers are unwilling to take the huge risk of insufficient storage capacity amid the surge in AI workloads," stated an analyst team from Wall Street financial giant JP Morgan in a report.

Earlier this week, one of its biggest competitors, Seagate Technology, provided revenue and profit outlooks for the second quarter that far exceeded market expectations on Tuesday evening Eastern Time. Since then, its stock price has risen by 20%, and it is expected to continue its strong upward trend, which has repeatedly set new highs this year.

Seagate and Western Digital are ranked second and third in terms of stock price increase among S&P 500 constituents this year, only behind Robinhood (HOOD.US), the stock trading platform operator favored by American retail investors, significantly outperforming the world's largest AI chip giant NVIDIA and the global leader in AI ASIC Broadcom (AVGO.US).

In comparison, the smaller enterprise-level hard disk storage product competitor SanDisk has seen its stock price increase fivefold since successfully spinning off from Western Digital in February. The company is set to announce its earnings on November 6 Eastern Time, with its stock price rising over 3% on Friday.

The S&P 1500 Technology Hardware, Storage, and Peripherals Index—which includes the three storage product companies mentioned above—has surged over 11% this year and reached a new record high on Thursday.

The largest technology giants in the U.S.—Google's parent company Alphabet (GOOGL.US), Microsoft (MSFT.US), Facebook's parent company Meta (META.US), and Amazon (AMZN.US)—all announced significant increases in their annual capital expenditure plans in the latest earnings reports released this week, ramping up large-scale investments in AI chips, enterprise-level storage hardware clusters, and the overall construction of AI data centers Goldman Sachs, the financial giant on Wall Street, predicts that by 2030, global spending on AI infrastructure closely related to AI could reach between $3 trillion and $4 trillion, with nearly half of that potentially concentrated in a range of data center enterprise-level DRAM and NAND storage products.

"If you rewind the timeline back to twelve or twenty-four months ago and asked anyone about AI computing infrastructure, they would have talked about AI GPUs and HBM, and basically wouldn't have mentioned hard drives that have long been abandoned by the market... Now, the strong surge of these storage giants is indeed exciting investors," said Martin Frandsen, a portfolio manager at Principal Asset Management.

Morgan Stanley stated in a research report that amid an unprecedented AI infrastructure frenzy where large enterprises and various government departments are pouring massive funds into AI, the demand for core storage chips closely related to artificial intelligence training/inference systems remains extremely strong, driving a surge in revenue for data center storage businesses, including HBM storage systems, server-level DDR5, and enterprise-level SSDs.

Unlike the three major chip manufacturers SK Hynix, Samsung Electronics, and Micron, which provide underlying DRAM/NAND storage chips, Western Digital, Seagate, and SanDisk focus on mature enterprise-level hard disk storage products. Before the recent wave of significant price increases for storage products, market bets on the storage sector were mainly concentrated on HBM storage systems, and at that time, the market did not realize that the emergence of various AI supermodels, such as Sora2, with increasingly strong generative video and performance updates would lead to a depletion of inventory for enterprise-level data center SSDs and HDDs, resulting in supply shortages.

Additionally, SK Hynix, Samsung, and Micron have concentrated most of their production capacity on HBM storage systems—these storage products require much more complex capacity, manufacturing, and testing compared to DDR series and HDD series storage chips. Therefore, the continuous migration of production capacity to HBM by these three leading storage chip manufacturers has largely contributed to the supply shortage of these hard disk storage products.

Why has this unprecedented surge in the storage chip sector favored Western Digital (WDC), Seagate, and the "new" SanDisk (split from Western Digital)? The core logic lies in the fact that the vigorous construction of AI data centers not only drives a surge in HBM storage demand but also synchronously expands the three-tier storage stack of AI data centers (hot tier NVMe SSD, warm tier/nearly line HDD, cold tier object and backup). Meanwhile, the long-standing supply restraint of HDD industry oligopolies, the recovery of the NAND cycle, and the long-term volume locking by cloud vendors have simultaneously improved the volume, price, and order visibility for these three companies.

Western Digital (WDC) focuses on near-line/data center HDDs with an ePMR + UltraSMR approach, mass-producing ultra-large capacity disks such as 32TB SMR and 24TB CMR (Ultrastar DC series), serving storage and data lake super storage scenarios, and acting as a "cost-effective" carrier layer for the massive data generated by AI training/inference Seagate's HAMR platform (Mozaic 3+) has begun mass production and shipment of 30TB nearline drives, and is advancing towards higher capacity (>30TB) nodes; HAMR leads in areal density, directly addressing cloud vendors' pain points of "rack power consumption/TB cost," making it a core beneficiary of AI data lakes and cold data pools.

SanDisk's data center NVMe SSDs leverage next-generation 3D NAND like BiCS8 and high-capacity QLC NVMe (E1.L/E3.S/U.2 form factors) to cover "hot/warm layers" with high concurrency and throughput, supporting feature libraries, retrieval, and intermediate results during AI training/inference.

Wall Street's bullish sentiment towards storage giants is rising, and this round of the storage "super cycle" is expected to last until 2027!

Global HBM leader — SK Hynix, which holds the largest market share in the HBM market, achieved record high performance in the third quarter, with operating profit soaring by 62%. This is backed by the complete "sell-out" of its HBM storage systems. The company stated that it has secured all DRAM and NAND customer demand for 2026, with HBM4 expected to ship by the end of 2025.

Wall Street financial giant Morgan Stanley indicated that SK Hynix's "sell-out" signal shows that storage capacity supply will become tighter, and the environment of continuous price increases for storage chips will persist throughout 2026, likely extending into 2027. The performance growth outlook for the global storage chip sector is becoming increasingly close to the super cycle benchmark of 2017-2018. Another Wall Street financial giant, Nomura, predicts that meaningful growth in storage chip capacity and actual production across the entire storage industry is expected to accelerate only in the latter half of 2027, leading to a supply-demand imbalance that will last for several years.

Asiya Merchant, a senior analyst at Citigroup, wrote in a report to clients: "Echoing similar statements from peers, Western Digital's management pointed out that with the accelerated penetration of AI large models, the massive AI workloads and data generation from hyperscale cloud/cloud customers are driving sustained strong storage demand. To meet this demand, customers are adopting higher-capacity enterprise hard drives at a faster pace, and Western Digital is also accelerating the planned technological transition to the next generation of ePMR and HAMR qualification. Notably, the company has now signed firm orders with seven customers extending into the first half of the 2026 calendar year, five of which cover the entire 2026 calendar year. Additionally, its largest hyperscale customer agreement is expected to cover the entire 2027 calendar year."

Analyst Merchant maintains a "Buy" rating on Western Digital, significantly raising the 12-month target price from $135 to $180, and including Western Digital in Citigroup's "90-day upward catalyst key observation" list As of Friday's early trading session, Western Digital's stock price rose over 12% to $157.

C.J. Muse, a senior analyst at Cantor Fitzgerald, reiterated that due to the incredibly strong demand in the enterprise HDD market, Western Digital has entered the firm's "preferred stocks" list. "Considering that we are still in the early stages of AI infrastructure development, coupled with the HDD oligopolists acting in a typical oligopoly manner (only increasing capacity through EB transitions, manufacturing/testing efficiency, and automation, confirming no new unit capacity additions for the time being), we expect the tightness to persist in the coming quarters, and it may even worsen," Muse wrote in a report to clients. Muse gave Western Digital an "overweight" rating and raised the target price from $160 to $200.

Erik Woodring, a senior analyst at Morgan Stanley, commented in a research report that this is "a live storage bull market." Price increases and the shift towards high-capacity storage drives have helped Seagate achieve a record high adjusted gross margin, which the firm noted is the most impressive part of the report. Woodring wrote, "Looking ahead, we expect similar tailwinds to continue driving gross margins upward." Therefore, Morgan Stanley maintains an "overweight" rating and raised Seagate's target price from $265 to $270.

Mark Miller, a senior analyst at Benchmark Equity Research, pointed out that positive factors for Seagate also include strong cloud computing demand and a significant increase in the production of AIPC personal computers equipped with AI chips. Miller added that the company's current order backlog is expected to extend through 2027