The Computer Electronics Show 2026 raised awareness of the growing demand for both memory chips and storage. In response, Micron (MU), Seagate Technology (STX), and Western Digital (WDC) shares soared on Tuesday.
MU stock added 10%, STX stock gained 14%, and WDC shares rose by 17.66%. They are all trading at all-time highs. Markets are betting that Micron’s profit margins will accelerate when it sells higher-priced chips to the AI server market. This is far more profitable than its consumer unit, Crucial, which it recently announced it would shut down.
Users will create mounds of images and videos from AI chatbots. This will require more storage, so markets are anticipating higher sales in that space.
Risks
For several decades, technology investors viewed WDC and STX stock as a low-margin business. Hard disks are products that do not have a moat. Since early 2025, however, shares have broken out. WDC stock, for example, gained 369.3% in the last year alone. The stock trades at a 32 times price-to-earnings ratio.
Corporations may not end up saving all the AI content that they create. That would send storage demand lower, hurting the storage supplier stocks.
For now, the risks of a pullback appear remote. But if the AI sector shows any hint of a cut in weaker demand, watch out below.
