AI Demand Fuels Surge in Data Storage Stocks

Western Digital and Seagate outperform as infrastructure spending accelerates.

Shares of major data storage firms have seen significant gains in 2025, driven by the global expansion of AI infrastructure. Western Digital and Seagate, two of the industry’s leading players, have each recorded stock price increases exceeding 200 percent this year. The surge reflects growing demand for hard drives and related storage solutions as companies scale up their AI capabilities. Both firms are now trading at record highs, outpacing broader market indices.

Earnings Forecasts and Market Confidence

Western Digital’s stock rose more than 11 percent on Friday after the company projected second-quarter earnings above Wall Street expectations. Analysts at J.P. Morgan noted that the company has secured purchase orders through calendar year 2026 with five of its largest customers. This suggests that clients are prioritizing storage capacity to meet rising AI-related needs. Seagate also issued a strong forecast earlier in the week, prompting a 22 percent increase in its share price.

On Friday, Seagate shares continued to climb, gaining an additional 1.1 percent. Both companies now rank among the top three percentage gainers on the S&P 500 this year, trailing only Robinhood. The performance underscores investor confidence in the long-term role of storage technologies in AI development. As data volumes grow, reliable and scalable storage has become a critical component of digital infrastructure.

Sector-Wide Momentum and Competitive Landscape

Smaller competitor Sandisk, which was spun off from Western Digital in February, has also experienced a dramatic rise. Its stock has increased fivefold since listing and rose 3.6 percent on Friday ahead of its upcoming earnings report. The broader S&P 1500 technology hardware, storage, and peripherals sector has gained more than 12 percent in 2025, reaching a new high. This trend reflects a wider recognition of the sector’s importance in supporting AI and cloud computing.

Tech giants including Alphabet, Microsoft, Meta, and Amazon have announced increased capital expenditures focused on chips and data centers. These investments are expected to drive further demand for storage solutions across enterprise and consumer applications. According to Goldman Sachs, global AI infrastructure spending could reach between $3 trillion and $4 trillion by 2030. The scale of this investment highlights the strategic role of storage providers in the evolving technology landscape.

Shifting Perceptions and Future Outlook

The rapid rise of AI has reshaped how investors view traditional hardware components like hard drives. Martin Frandsen, a portfolio manager at Principal Asset Management, remarked that few would have associated AI with storage just a year or two ago. Today, these components are seen as essential to enabling the data-intensive workloads that power machine learning and generative AI. This shift in perception has contributed to the sector’s strong market performance.

Looking ahead, storage firms are likely to benefit from continued infrastructure buildouts and long-term service contracts. The ability to deliver high-capacity, energy-efficient solutions will be key to maintaining momentum. As AI applications become more widespread, the demand for robust storage systems is expected to remain strong. Companies that can scale effectively and align with evolving customer needs may continue to outperform.