Buy 3 AI-Driven Storage Devices Stocks to Boost Your Portfolio Returns

The computer storage devices industry players are likely to gain from solid momentum in cloud computing, Internet of Things (IoT), auto, connected devices, virtual reality and artificial intelligence (AI) in the long run. These factors propel the demand for robust data storage solutions, bolstering computer storage product requirements.

These companies rely on AI for IT Operations (AIOps) and machine learning (ML) to manage and optimize storage solutions. To streamline data storage, companies are relying on virtualization technologies. As more data is added from IoT, companies are turning to edge computing architecture to reduce latency and boost flexibility.

At this stage, we narrowed our search to three AI-driven storage devices manufacturers to strengthen your portfolio returns. These are: Western Digital Corp. WDC, NetApp Inc. NTAP and Dell Technologies Inc. DELL. Each of our picks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our three picks year to date.

Western Digital Corp.

Zacks Rank #1 Western Digital has been witnessing strong execution amid intensified cloud and AI demand. Cloud end market (90% of total revenue) surged 36% in the last reported quarter, driven by strong demand for high-capacity nearline HDDs. WDC doubled shipments of 26TB CMR and 32TB UltraSMR drives and is on track to ramp HAMR drives in the first half of 2027.

WDC expects the proliferation of generative AI-driven storage deployments to result in a client and consumer device refresh cycle, and boost content creation and storage in smartphone, gaming, PC and consumer electronics in the long run. Increasing AI adoption is likely to drive increased storage demand across both HDD and Flash at the edge and core, thereby providing ample business opportunities. 

Generative AI adoption surged to 65% in 2024 from 33% in 2023. Gen AI adoption is driving eSSD sales due to its speed, reliability and efficiency over HDDs. Growing AI data boosts demand, fueling eSSD market growth and reshaping storage.

Agentic AI is driving future data growth, while its platform business is gaining traction among native AI firms and SaaS providers. WDC expects fiscal first-quarter 2026 revenues of $2.7 billion (+/- $100 million), up 22%, driven by strong data center demand and high-capacity drive adoption.

Strong Estimate Revisions

For fiscal 2026 (ending June 2026), the Zacks Consensus Estimate currently shows revenues of $10.92 billion, suggesting a decrease of 17.8% year over year and earnings per share of $6.50, indicating an increase of 31.9% year over year. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the last 30 days.

For fiscal 2027 (ending June 2027), the Zacks Consensus Estimate currently shows revenues of $11.28 billion, suggesting an improvement of 3.3% year over year and earnings per share of $7.11, indicating an increase of 9.4% year over year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days.

NetApp Inc.

Zacks Rank #2 NetApp has been benefiting from increasing momentum across the all-flash portfolio, especially strength in Keystone adoption and growth in first-party and marketplace cloud storage services. 

Demand for AI solutions remains strong. Deepening ties with hyperscalers act as a tailwind for NTAP.  Apart from the demand for flash and block, the increasing demand for NetApp’s cloud storage and AI solutions bodes well. 

In the last reported quarter, the company won more than 150 AI and data lake modernization deals and its AI business registered five-fold growth year over year. NTAP expanded its AI ecosystem and the launch of new AI reference architectures with NVIDIA (AIDP), Intel (AIPod Mini), Cisco (FlexPod), and Lenovo (AIPod). Certification for NVIDIA DGX SuperPOD, indicates that NetApp is deeply embedded in the evolving AI stack. NTAP expects fiscal 2026 to be a pivotal year for enterprise AI storage.

Solid Estimate Revisions

For fiscal 2026 (ending April 2026), the Zacks Consensus Estimate currently shows revenues of $6.75 billion, suggesting an improvement of 2.7% year over year and earnings per share of $7.74, indicating an increase of 6.8% year over year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.

For fiscal 2027 (ending April 2027), the Zacks Consensus Estimate currently shows revenues of $7.09 billion, suggesting an improvement of 5.1% year over year and earnings per share of $8.64, indicating an increase of 11.7% year over year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.

Dell Technologies Inc.

Zacks Rank #2 Dell Technologies has been benefiting from strong demand for AI servers driven by ongoing digital transformation and heightened interest in generative AI applications. In the last reported quarter, DELL secured $12.1 billion in AI server orders, surpassing shipments and building a strong backlog. 

DELL’s PowerEdge XE9680L AI-optimized server is in high demand. Strong enterprise demand for AI-optimized servers is aiding the company. A robust partner base, which includes the likes of NVIDIA, Alphabet and Microsoft has been a major growth driver. 

DELL is expanding its cloud services through its infrastructure solutions and rich partner base that provides essential hardware and services that support cloud environments. Through its APEX platform, DELL provides multi-cloud solutions and advanced AI infrastructure, which have become the key highlights of its offerings.

Impressive Estimate Revisions

For fiscal 2025 (ending January 2026), the Zacks Consensus Estimate currently shows revenues of $104.26 billion, suggesting an improvement of 9.1% year over year and earnings per share of $9.47, indicating an increase of 16.3% year over year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.

For fiscal 2026 (ending April 2027), the Zacks Consensus Estimate currently shows revenues of $111.29 billion, suggesting an improvement of 6.7% year over year and earnings per share of $10.83, indicating an increase of 14.4% year over year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days.

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This article originally published on Zacks Investment Research (zacks.com).

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