ZACKS·2025-12-05 16:55Core Viewpoint - The Zacks Computer – Storage Devices industry has significantly outperformed the broader market, driven by explosive growth in artificial intelligence workloads requiring high-capacity storage solutions [2][5]. Industry Performance - The Zacks Computer – Storage Devices industry advanced nearly 70% year-to-date, compared to the S&P 500's 16.5% gain [2]. - Data center operators and hyperscalers are expanding infrastructure rapidly, sustaining demand for both hard disk drives (HDDs) and NAND flash-based solutions [3]. Company Highlights - Western Digital Corporation (WDC) has delivered a remarkable 260% return year-to-date, with fiscal 2026 adjusted EPS projected at $7.66, reflecting over 55% growth from the prior year [7][9]. - Revenues from the Cloud segment, which account for nearly 90% of Western Digital's revenue, grew 31% in the most recent quarter [9]. - Sandisk Corporation (SNDK), spun off from Western Digital, has risen nearly 500% since its relisting in February 2025, with fiscal 2026 EPS growth projected at over 300% [10][13]. Market Trends - The AI-powered storage market is projected to grow from $30.27 billion in 2025 to $187.61 billion by 2035, at a 20% compounded annual growth rate (CAGR) [6]. - Innovations such as UltraSMR and heat-assisted magnetic recording have enabled Western Digital to ship industry-leading 30TB+ drives tailored for AI data lakes [9]. Investment Outlook - Both Western Digital and Sandisk carry Zacks Rank 1 (Strong Buy) ratings, benefiting from favorable earnings revisions and positioned to capture a significant share of the upcoming storage spending wave [18].