By Shashwat Chauhan
(Reuters) – Shares of data storage companies such as Seagate and Western Digital have far outperformed the broader market this year, driven by staggering demand for hard drives in the global race to expand AI-related infrastructure.
Both Seagate and Western Digital shares were trading at record levels, having risen more than 200% this year thanks to the rise of artificial intelligence.
Western Digital gained more than 11% on Friday after forecasting second-quarter earnings above Wall Street estimates.
“The fact that WDC has secured purchase orders extending into the 26th year with five of its largest customers is a clear indication that customers are unwilling to risk being short on storage capacity as AI-related demand continues to rise,” JPMorgan analysts said in a note.
Earlier this week, rival Seagate Technology also forecast second-quarter revenue and earnings above estimates. Since then, its shares have risen more than 22% and were up 1.1% on Friday.
Seagate and Western Digital are the second- and third-highest percentage gainers this year on the S&P 500, behind only trading platform operator Robinhood.
Its smaller rival Sandisk, spun off from Western Digital in February, has also seen a five-fold rise in its shares since going public. Shares of the company, which will report results on Nov. 6, rose 3.6% on Friday.
The S&P 1500’s technology hardware, storage and peripherals sector, which is home to all three companies, is up more than 12% for the year and hit an all-time high on Friday.
Tech giants Alphabet, Microsoft, Meta and Amazon announced plans for higher annual capital expenditures as they pour money into chips and data centers.
Global spending on AI-related infrastructure could reach $3 trillion to $4 trillion by 2030, Goldman Sachs estimates.
“If you went back twelve or twenty-four months and asked someone about AI, they wouldn’t have talked about hard drives… It’s exciting,” said Martin Frandsen, portfolio manager at Principal Asset Management.
(Reporting by Shashwat Chauhan and Medha Singh in Bengaluru; Editing by Leroy Leo)