3 Storage Devices Stocks to Keep an Eye on in a Thriving Industry

The Zacks Computer-Storage Devices industry players are likely to gain from exponential data generation growth, owing to 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 factors are favorable for prominent industry players like Super Micro Computer, Inc SMCI, NetApp, Inc NTAP and Quantum Corporation QMCO.

The democratization of higher internal memory smartphones, faster Internet speed, and 5G will likely act as a tailwind for industry participants. As cyber-attacks continue to increase in frequency, the demand for end-to-end encryption will drive growth in secure storage solutions. Nonetheless, escalating trade tensions, especially with China, global macroeconomic turbulence, along with volatile supply chain dynamics and associated inflation, remain headwinds.

Industry Description

The Zacks Computer-Storage Devices industry houses companies that design, develop, manufacture and market various hard disk drives (HDDs) and solid-state drives (SSDs). These drives are utilized in PCs, laptops, mobiles, servers, network-attached storage devices, video game consoles, digital video recorders and other consumer electronic devices. Some industry participants, including Pure Storage, provide software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Many industry players offer high-performance modular memory subsystems, mount and blade server systems, enterprise storage and data management software, and hardware products and services. Some industry participants also provide purpose-built servers for storing and accessing data over a shared network or the Internet.

4 Trends Shaping the Computer-Storage Industry's Future

Innovation in Cloud Storage Technologies to Drive Adoption: Broader storage options from collocated hardware (such as hard disks and tape drives) to many cloud storage solutions have put the industry on a growth trajectory. Industry players are well poised for growth, owing to a rapid increase in data, the complexity of data formats, and the need to scale resources at regular intervals. These companies rely on AI for IT Operations (AIOps) and machine learning 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. Kubernetes storage is becoming increasingly popular as it facilitates greater agility and scalability. This has bolstered the deployment of high-capacity mass storage products, which is a positive for industry players.

Rapid Implementation of 5G Opening New Business Avenues: The accelerated deployment of 5G and rebound in the smartphone market will likely propel the industry to newer heights. Extensive implementation of cloud computing solutions, increased Internet usage, and rapidly growing media and regulatory compliance have led to a data explosion for enterprises. The implementation of hybrid work models triggered the demand for data-intensive applications like video conferencing and cloud services. Adequate storage is essential for harnessing data and is expected to raise demand for high-storage capable SSDs and internal memory in advanced smartphones.

Increases in IT Spending Bode Well, but Macro Conditions Remain Concerns: Escalating trade tensions and tariffs are emerging as a key concern. These are weighing heavily on global macroeconomic conditions and can disrupt supply chain dynamics. Uncertainty in the macro backdrop and inflationary pressure could affect spending across small and medium-sized businesses globally. The uncertainty in business visibility could dent the industry’s performance in the near term.

However, optimism surrounding higher IT spending bodes well. Per a report from Gartner, worldwide IT spending is now projected to reach $5.61 trillion in 2025, indicating an increase of 9.8% from 2024 levels. Devices segment is expected to grow 10.4% in 2025, mainly due to generative AI hardware upgrades, added the report. 

Uncertainty Around PC Shipments: Worldwide PC shipments were up 4.9% year over year in the first quarter of 2025, per an IDC report. The research firm noted that the demand has witnessed a “pull-in in the first quarter” owing to expectations of tariffs. However, IDC highlighted that the new tariffs could have a direct inflationary impact on the PC market. This could delay IT spending across the industry. The global recession also remains concerning despite the presence of tailwinds like demand for on-device AI PCs and installed base upgrades ahead of Windows 10 end of support, added the firm.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Computer Storage is housed within the broader Zacks Computer And Technology Sector. It carries a Zacks Industry Rank #66, which places it in the top 27% of more than 247 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few stocks that you may want to consider for your portfolio, considering bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.

Industry Underperforms S&P 500 and the Sector

The Zacks Computer-Storage Devices industry has underperformed the S&P 500 composite and the broader sector in the past year.

The industry has plummeted 50.6% in this period compared with the S&P 500’s decline of 2.9%. The broader sector has lost 8.3% in the same time frame.

One-year Price Performance

Industry's Current Valuation

On the basis of forward 12-month P/E (or Price/Earnings), which is a commonly used multiple for valuing computer storage devices companies, we see that the industry is currently trading at 13.10X compared with the S&P 500’s 18.28X.This is below the sector’s forward 12-month P/E of 20.18X.

In the past five years, the industry has traded as high as 194.54X and as low as 10.32X, with the median being 16.78X, as the charts below indicate.

Forward 12-Month Price-to-Earnings (P/E) Ratio

 

3 Computer-Storage Devices to Keep an Eye on

Super Micro Computer: This San Jose, CA-based company is a total IT solution manufacturer for AI/ML, Cloud, HPC, Storage and 5G/Edge technologies. SMCI’s rack-scale plug-and-play Total AI and IT Solutions (especially the Deep-Learning and LLM-optimized ones based on NVIDIA HGX-H100) are gaining substantial traction.

With enterprises and cloud providers expanding their AI-driven data center capacity, the need for high-performance, energy-efficient servers is accelerating exponentially. Super Micro Computer’s forecast of achieving $40 billion in annual sales by fiscal 2026 underscores its ambitious expansion plans and confidence in capturing rising AI infrastructure demand.

This target represents more than a 168% increase from its fiscal 2024 net sales of $14.94 billion.

Super Micro Computer’s liquid-cooled server solutions are gaining momentum as they address the power and thermal challenges pertaining to large-scale AI workloads. SMCI’s focus on modular and rack-scale solutions also enables customers to scale efficiently, driving repeat business and boosting customer retention.

Expansion of collaboration with NVIDIA is another plus. SMCI’s servers are optimized for NVIDIA’s high-performance graphics processing units, including the newly launched Blackwell platform. This platform is expected to power the next generation of AI clusters and hyperscale data centers, providing Super Micro Computer with a profitable growth avenue.

Currently, SMCI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for fiscal 2025 earnings has remained at $2.55 per share in the past seven days. The stock has declined 65.1% in the past year.

Price and Consensus: SMCI

Its premium Myriad and ActiveScale products continue to witness healthy demand trends. In January 2025, Quantum enhanced its Quantum Myriad all-flash file system, offering the first-ever in-place scaling with automatic data leveling. These upgrades provide greater flexibility and adaptability, allowing customers to effectively manage the evolving storage needs of the AI era.

Quantum gained strong traction with DXi data protection appliances, securing major deals, including a multi-million-dollar refresh at a top European retailer and new business with a global tech manufacturer in the fiscal third quarter of 2025.

In March 2025, Quantum launched Quantum GO Refresh for DXi T-Series, which is a flexible subscription program designed to keep businesses secure and prepared against ransomware and other cyber threats. This new offering, part of the Quantum GO portfolio, provides an all-in-one subscription model that includes hardware, software and support while ensuring regular hardware refreshes as technology evolves.

Currently, QMCO carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2025 bottom line is pegged at a loss of at $4.82 per share, unchanged in the past seven days. The stock has declined 2% in the past year.

Price and Consensus: QMCO

NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, especially the C-series capacity flash and ASA block-optimized flash. The new all-flash A-series is also picking up momentum. These enterprise storage products will allow users to boost workloads, including traditional enterprise applications and Gen AI. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market.

Strength in Keystone-as-a-service offering is aiding its RPO. Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud.

Apart from the demand for flash and block, increasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal third quarter of 2025, the company won more than 100 AI and data lake modernization deals. The company is also working on the development of GenAI cloud and on-premises solutions in collaboration with industry behemoths.

Management lowered its outlook for fiscal 2025, driven by the divestment of Spot by NetApp, forex headwinds, global Public sector weakness and fiscal third-quarter revenue performance. It now expects full-year revenues in the $6.49-$6.64 billion band (prior view: $6.54-$6.74 billion). Free cash flow for fiscal 2025 is expected to be slightly low on a year-over-year basis due to SSD-related cash outflows.

Currently, NTAP carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2025 earnings stood at $7.23 per share, unchanged in the past 60 days. The stock is down 25.8% in the past year.

Price and Consensus: NTAP

 

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Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
 
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This article originally published on Zacks Investment Research (zacks.com).

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