VenkatP
Physician, Growth & Value Stock Investor
Seagate ranks behind Micron and SanDisk but offers AI cold-storage and enterprise nearline leverage, while Western Digital is solid but offers less pure torque after separating SanDisk. Micron remains king on quality, HBM, NAND and AI leverage, and SanDisk has asymmetric re-rating torque if NAND tightness persists. x.com
In uncertain markets, hard-drive makers Seagate and Western Digital are better positioned than memory names like Micron and Sandisk. AI creates huge amounts of data that must be stored cheaply, lifting demand for 20TB+ HDDs in data centers and cold storage. Storage is stable and cash-generating with slower growth; memory is cyclical with bigger upside when supply is tight, so money rotates to storage when uncertain. Micron got hit on capex worries. Offered as a theory. x.com
Rising memory contract prices strengthen the case for memory stocks still far below their highs. JPMorgan forecasts Q4 DRAM prices up 13% and NAND up 18%; Micron is 28% below its 52-week high, Seagate 44%, Sandisk 47% and Western Digital 55%. x.com
Sandisk's fast-growing data-center revenue strengthens its case among memory names with upside. Data-center revenue rose 61% quarter over quarter; revenue of $11.03B, adjusted EPS of $49.51 and adjusted gross margin of 85.1% all exceeded estimates. For upside among Micron, Sandisk and Kioxia, Micron ranks first, then Sandisk, then Kioxia, until further guidance. x.com x.com
AI data and content creation could lift Seagate's and Western Digital's cross-cycle earnings even if supply catches up and pressures prices and margins. Western Digital reported hyperscaler demand signals through 2030/31, making 2013-2024 normalized earnings a poor baseline. Still not a huge fan of their stocks given their large premium to memory makers and Toshiba's production ramp. x.com x.com
Western Digital is about to play catch-up with the memory space. It has lagged as Micron, Sandisk, Samsung and SK Hynix ride NAND, DRAM and HBM price spikes, because it rides capacity storage for AI data lakes, which is real demand but a different, slower-moving market. x.com
Sandisk's customer demand is growing despite neocloud-credit concerns, supporting the memory-industry case for Micron and SK hynix. Sandisk CFO Luis Visoso said demand is stronger than last quarter and that its mostly investment-grade largest customers show no credit-related impact. x.com
The valuation gap favors SK hynix and Samsung over Corning, Seagate and Western Digital. Companies trading at 20x are still called cheap while the memory makers trade at 2x; Corning is not cheap on a $4 run rate even with growth, and neither are Seagate or Western Digital. The gap should narrow as memory rises while HDD stalls. x.com x.com
Seagate's gross margin jump to 57.8% from 52.7% shows pricing power in a supply-constrained hard-drive market. AI data needs storage, hyperscalers seek capacity, and HAMR packs more terabytes into existing factories; roughly 90% of big-cloud data sits on hard drives. Sales reached $4.2B and next-quarter guidance of $4.8B beats the Street's $4.53B. This cycle looks to be accelerating rather than peaking. Overweight, $1,050 target. x.com x.com
Western Digital benefits from HDDs' low storage cost and growing cloud demand, with higher NAND prices adding pricing power. Nearline bit demand normally grows 20-25% with some deflation, while AI data growth now exceeds 30%; HDD costs ~$0.02-$0.03/GB versus ~$0.25 for NAND. Before AI, the consolidated, ~95% cloud-exposed market looked worth a low-to-mid-teens multiple of normalized EPS. Entry barriers are extremely high, but irrational competition among the three players is a risk. x.com x.com … Show more
Seagate and Western Digital trade at a huge multiple premium to other storage and memory, driven by vibes rather than cash flow, and Toshiba's expansion undermines the stable duopoly that justified it. Per @wallstengine, Toshiba plans about $380M to double HDD capacity for AI data centers by FY2027. Toshiba is a generation behind, with ramp issues, and is not a material near-term threat to profits, but the market will price the broken duopoly. The charts are awful. x.com x.com x.com x.com x.com
Western Digital and Seagate have the clearest long setups in storage because they combine higher margins, low competition risk and no concerns about capex or production expansion. That fits a regime where a sharply higher long end rewards free cash flow and punishes capex without an immediate payoff, after a Warsh press conference that raised doubts over Fed inflation control. The risk is that both keep getting dragged down by the broader memory sector, where DRAM and NAND look stretched. x.com
