Why have Sandisk and memory-related stocks surged as the AI sector remains stagnant

Memory and Storage Stocks Lead S&P 500 Gains in 2025

Photo credit: Brent Lewin / Bloomberg via Getty Images

In 2025, companies specializing in memory and data storage emerged as some of the top performers within the S&P 500 index.

Main Highlights

• Stocks tied to memory and data storage surged at the start of 2026, with the rally gaining momentum following optimistic remarks from Nvidia CEO Jensen Huang on Tuesday.
• For several months, data storage companies have experienced significant growth, fueled by soaring demand and tight supply, allowing them to sidestep concerns about an AI market bubble that has impacted other sectors within the artificial intelligence space.

Although major technology stocks have seen diminished enthusiasm recently, early trading in 2026 indicates that investors are still eager to pursue sectors showing strong momentum.

Earlier this week, shares of data storage firms soared after Nvidia’s CEO Jensen Huang, speaking at the CES event in Las Vegas, emphasized the immense need for memory and storage hardware driven by the AI industry.

Sandisk (SNDK) shares jumped over 27% on Tuesday, building on a more than 500% gain in 2025 and adding another 43% in just the first three days of 2026. Western Digital (WDC) and Seagate Technology (STX), both of which tripled in value last year, rose by 17% and 14% respectively on Tuesday, though all three stocks saw some pullback on Wednesday.

Significance of the Trend

Artificial intelligence has dominated financial markets for the past three years, but leadership within the sector has shifted as investors identify new challenges in expanding data center infrastructure. Recently, memory and storage stocks have become the focus of investor attention.

These stocks stand out within the broader AI market, which faced turbulence at the end of 2025 due to fears of an AI bubble. Such concerns have persisted into the new year. As of Tuesday’s close, all members of the so-called Magnificent Seven except Amazon (AMZN) had posted losses in 2026. Other notable AI-related companies like Constellation Energy (CEG), Oracle (ORCL), and Applovin (APP) have also declined since the year began.

On Monday, Huang reportedly told analysts that the market for AI-specific memory and storage remains largely untapped, but he expects it to become the world’s largest storage segment.

Last year, the demand for memory and storage devices far exceeded supply, resulting in sharp price increases. Micron (MU), a leading memory chip manufacturer, saw its gross margins rise to 56% in the latest quarter, up from 38% a year earlier.

Sandisk, Western Digital, and Seagate are poised to benefit from the massive volumes of data generated by AI, which requires extensive datasets for training and produces even more data during inference. According to a recent Bank of America report citing International Data Corporation, the total amount of data stored globally is projected to double between 2024 and 2029.

Looking Ahead

Bank of America analysts predict that the accumulation of active data will keep expanding as organizations retain more information for AI training, analytics, and regulatory compliance. They anticipate that 2026 will be a standout year for AI inferencing, as businesses increasingly implement AI to boost efficiency, lower expenses, and unlock new revenue streams.