Storage stocks jump as Seagate's upbeat forecast fuels confidence in AI spending
REUTERS/Mike Blake
April 28 : Shares of storage companies jumped in extended trading on Tuesday, after strong revenue and profit forecasts from Seagate Technology signaled that spending by enterprises on artificial intelligence equipment will remain strong.
Seagate's strong forecast and the late-day surge in storage stocks underscore investors' confidence that enterprise AI spending will sustain demand for data-storage equipment despite broader market concerns about the pace of AI adoption.
Companies have funneled increasing amounts of money into data drives, hard disks and other digital storage as they rushed to upgrade their artificial intelligence models and infrastructure.
Shares of Seagate soared 16 per cent in extended trading, while Western Digital jumped 10 per cent, Micron Technology climbed 3 per cent and SanDisk rose 4 per cent, adding a combined $60 billion to the four storage technology companies' market value.
"AI is amplifying demand across existing applications such as video, where large cloud providers are integrating AI in the platforms to boost user engagement and revenue opportunities, driving new video creation and the need to store it," said Seagate CEO Dave Mosley on a post-earnings conference call.
Seagate forecast fourth-quarter revenue of $3.45 billion, plus or minus $100 million, beating estimates of $3.16 billion, according to data compiled by LSEG.
Executives at Seagate and rival Western Digital have previously said their capacity has been fully allocated and sold out through calendar 2026.
In Tuesday's trading session, the Nasdaq fell almost 1 per cent, hurt by concerns about the AI boom after a report said OpenAI has fallen short of its goals for new users and revenue in recent months.
Nasdaq futures rose 0.2 per cent following Seagate's report, showing that traders expect tech stocks to partly rebound in Wednesday's session.
The rise in storage demand also comes alongside a surge in memory prices, as power-hungry data centers use a significant portion of high-bandwidth memory to store and process massive amounts of information.
The shortage of memory chips has left companies scrambling to find hardware that can aid their AI efforts and store data, benefiting companies such as Seagate that make physical hard drives.
Ahead of Tuesday's report, Seagate shares had already more than doubled, year to date.
