A 39-fold increase in one year, can you still buy stocks in the storage sector?

The S&P 500 has risen 28% over the past 12 months, Nvidia up 73%. But compared to the storage sector, these gains are still modest. SanDisk was $34.61 a year ago, today $1,406.32, a 39-fold surge.

This NAND flash manufacturer, spun off from Western Digital just 14.5 months ago, is the best-performing US stock of 2026 so far, soaring 492% this year. Behind it, Micron, Seagate, and Western Digital, the four major US storage manufacturers, have YTD gains ranging from 124% to 492%, with the lowest still 23 times Nvidia’s increase. The “AI revolution” label as a “market seller” is shifting from GPUs to memory.

Most notably, May 5 was this day. SanDisk surged 11.98% in a single day, Micron up 11.06%, Western Digital up 5.18%, Seagate up 4.38%. Of the four US storage stocks, three hit 52-week highs.

The catalysts were two earnings reports and a supply story. On April 28, Seagate announced Q3 FY26 revenue up 44% year-over-year, gross margin at a record 47%, with CEO Dave Mosley stating in the earnings call, “AI has ushered Seagate into a new era of structural growth,” with nearline exabyte capacity allocated through 2027.

Two days later, SanDisk reported Q3 FY26 revenue of $5.95 billion, up 252% YoY, exceeding guidance by $1.15 billion. Data center revenue grew 645% YoY, nearly doubling sequentially, with Q4 guidance up another 308% to 334% YoY. Coupled with Micron’s credit rating upgrade by Fitch, the entire sector surged on Monday.

But that’s surface level. Looking at the four stocks side by side, “the entire storage sector rising” is actually a misleading summary. They are driven by three completely different supply stories, with vastly different gains.

From the year-to-date performance, SanDisk +492.43%, Seagate +180.46%, Western Digital +170.21%, Micron +124.40%, spread across four entirely different tiers. Meanwhile, the S&P 500 rose only 6.04%, and Nvidia 5.37%. Over the past five days, Nvidia even fell 7.82%. The “AI first beneficiary” label is shifting: the GPU story driven by large model training has completed its valuation expansion cycle over the past year, and funds are now flowing downstream into memory and storage that support AI workloads.

This tiering isn’t uniform. It’s layered along media properties.

Recent quarterly financials clearly illustrate this layering. SanDisk’s NAND revenue grew 252% YoY, Micron’s DRAM/HBM revenue up 196%, Western Digital and Seagate’s HDD revenue up 44-45%. NAND and DRAM are the explosive segments this round, HDD is steady growth, with a 4- to 5-fold difference between the two tiers.

Gross margin layering is even more dramatic. Micron’s Q2 FY26 gross margin is 74.4%. That’s an extreme figure for a chip manufacturer, meaning $74 profit per $100 of DRAM and HBM sold. Seagate’s 47% gross margin, while a record high for them, still lags behind DRAM producers by an order of magnitude. The difference stems from supply structure. HBM capacity is concentrated among three companies (SK Hynix, Samsung, Micron), all selling under long-term contracts through 2026. HDD capacity is evenly distributed between Seagate and Western Digital, with more dispersed pricing power.

Pricing signals are consistent.

According to TrendForce’s upward revision on February 2 of the Q1 2026 memory contract prices, PC DRAM increased about 100% quarter-over-quarter, server DRAM about 90%, and server LPDDR4X/5X about 90%, all hitting new highs. On NAND Flash, enterprise SSD prices rose 53% to 58%, with overall NAND up 55% to 60%, roughly half the increase of DRAM.

This explains the divergence. AI servers require both NAND and DRAM, but more critically bandwidth (HBM) and capacity density (DDR5, LPDDR5X). The supply-demand gap on the DRAM side is much larger. Micron CEO’s statement at the Q2 FY26 earnings call, “We’re sold out for 2026,” clearly articulates this supply story. HBM4 36GB 12H has already been mass-produced for Nvidia’s Vera Rubin platform, with FY26 capital expenditure raised from $20 billion to $25 billion to prepare for 2027.

Among the four manufacturers, SanDisk is the most worth examining separately.

SanDisk was spun off from Western Digital on February 24, 2025, and listed on Nasdaq. Its opening price was $52, closing at $48.60, with a market cap of about $7.2 billion. On the same day, Western Digital closed at $49.02, with a market cap of about $16.9 billion. At the spinoff, Western Digital was 2.3 times larger than SanDisk.

14.5 months later, SanDisk’s market cap is $208.3 billion, Western Digital’s is $160.4 billion. SanDisk has become 1.3 times larger than Western Digital. Such inversion is rare in large corporate spinoff histories. Most spinoffs see the subsidiary take 3 to 5 years to catch up in market value; SanDisk achieved this in just 14.5 months.

The reason is it was spun out at the right time. When Western Digital decided to spin off in 2024, they cited “NAND and HDD are in different capital cycles, and separate operations will provide clearer valuation.” This judgment was later validated by the market: after becoming independent, SanDisk focused solely on NAND, coinciding with the explosive demand for enterprise SSDs driven by AI data centers. Western Digital continued with HDD, benefiting from the structural growth of cloud storage archiving. Separately, each company aligns with a different story. Had they not split, a company holding two businesses in completely different supply cycles would likely be valued more conservatively, with a multiple in the middle.

Bain & Co. raised SanDisk’s target price from $1,250 to $1,700 on May 4, citing the visibility of its data center SSD business. SanDisk’s earnings disclosed five long-term contracts, $11 billion in financial guarantees, and over a third of FY27 NAND bits already locked in by customers. This is a sector traditionally treated as a commodity cycle, now showing a “long-term contract + customer prepayment” structure similar to advanced wafer foundries.

Overall, funds are flowing from GPUs toward memory. DRAM is the true alpha of this cycle, HDD represents a different, more prolonged structural growth. SanDisk, just 15 months post-spin-off, relies on NAND data center business to surpass its parent Western Digital in market value.

On May 5, the same trading day, Nvidia fell 1.03%, TSMC dropped 1.79%, while SanDisk rose 11.98%. Also an “AI beneficiary,” the market is clearly voting with its feet, distinguishing which supply segment is most scarce.

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