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Industry Description
The Zacks Computer-Storage Devices industry houses companies that design, develop, manufacture and market various HDDs and 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
AI’s Impact on the Storage Devices Industry: Rapid proliferation of AI is overhauling the entire tech landscape. AI workloads like training large language models and running inference are driving demand for high-speed, high-capacity and low-latency storage solutions. Traditional storage architectures are insufficient for the data throughput required by AI applications, prompting a transition toward NVMe-based SSDs (PCIe Gen 4/5/6), software-defined storage and storage class memory. Object storage is best suited for storing unstructured data, a common prerequisite for AI workloads. Other fast-emerging solutions include Parallel File Systems Optimized for AI and QLC NAND SSDs for AI Data Lakes.
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 focusing 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. Moreover, the industry’s focus is shifting from one-time hardware sales to recurring, usage-based revenue streams as cloud-native storage models (object storage and Storage-as-a-Service) gain traction.
Increasing PC Shipments: Worldwide PC shipments were up 8.2% year over year in the third quarter of 2025, per a Gartner report. The research firm noted that demand across most regions was driven by the Windows 10 end-of-support refresh cycle, except North America. Further, the AI segment will comprise 31% in share of shipments in 2025, compared with 15% in 2024, as the industry moves toward “AI PCs with integrated NPUs for enhanced on-device AI capabilities,” added Gartner.
However, Gartner highlighted that consumer demand was impacted by geopolitical and macroeconomic headwinds. There remains cautious spending behavior, including delaying PC purchases and seeking discounts.
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.
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 #16, which places it in the top 7% of more than 243 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 Outperforms the S&P 500 but Lags the Sector
The Zacks Computer-Storage Devices industry has outpaced the S&P 500 composite but lags the broader sector in the past year.
The industry has risen 57.7% in this period compared with the S&P 500’s growth of 14.7%. The broader sector has gained 21.1% in the same time frame.
One-Year Price Performance
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Industry's Current Valuation
On the basis of forward 12-month Price/Earnings (P/E), which is a commonly used multiple for valuing computer storage device companies, we see that the industry is currently trading at 18.66X compared with the S&P 500’s 23.35X. This is also below the sector’s forward 12-month P/E of 28.15X.
In the past five years, the industry has traded as high as 102.02X and as low as 9.84X, with the median being 18.3X, as the charts below indicate.
Forward 12-Month Price-to-Earnings (P/E) Ratio
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Forward 12-Month P/E Ratio
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3 Computer-Storage Devices to Add to Portfolio
Western Digital: Headquartered in San Jose, CA, WDC is a leading developer and manufacturer of data storage devices and solutions.
The rapid adoption of AI and data-intensive workloads at hyperscalers is fueling strong demand for its solutions. Customers are transitioning to higher-capacity drives, with shipments of its latest ePMR products, offering up to 26TB CMR and 32TB UltraSMR, exceeding 2.2 million units in the September quarter.
The reliability, scalability and TCO benefits of its ePMR and UltraSMR technologies remain key to its success in the data center market. Western Digital plans to build on this with its next-generation HAMR drives. All top seven customers have issued purchase orders through the first half of 2026, with five extending through year-end, and one major hyperscale customer securing supply for all of 2027.
Strong free cash flow and a dividend hike signal a shareholder-friendly strategy. It expects fiscal second-quarter revenues of $2.9 billion (+/- $100 million), up 20%, driven by strong data center demand and HDD uptake.
At present, WDC sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for fiscal 2026 bottom line for the company stands at $7.63, unchanged in the past 30 days. The stock has skyrocketed 166.1% in the past year.
Price and Consensus: WDC
Demand for Sandisk’s NAND products continues to exceed supply and it expects this trend to persist in 2026 and beyond. Management noted that demand for NAND storage products is increasing rapidly as investments in data centers and AI infrastructure ramp up and this will boost demand for SSD products. By 2030, investments are expected to top $1 trillion, added SNDK. In the last reported quarter, data center revenues grew 26% sequentially, driven by hyperscaler and OEM engagement. Additional tailwinds include PC refresh cycles, rising premium smartphone (newer models with AI capabilities) demand and strong consumer gaming traction.
For the first quarter of fiscal 2026, Sandisk reported revenues of $2.3 billion, rising 23% year over year, well above guidance. Adjusted free cash flow reached $448 million. For the fiscal second quarter, it expects revenues to be between $2.55 billion and $2.65 billion, driven by mid-single-digit bit growth and double-digit price rise.
At present, SNDK flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its fiscal 2026 bottom line is pegged at $12.59, unchanged in the past seven days. The stock has gained 315.3% in the past year.
Price and Consensus: SNDK
Teradata: TDC is a leading provider of connected multi-cloud data platforms. It has evolved from an enterprise database company to an enterprise analytics platform provider.
TDC’s AI and hybrid cloud innovations bode well. TDC’s hybrid cloud is well-positioned to gain from the growth seen in rising enterprise adoption of AI and Agentic AI. In the last reported quarter, Public cloud ARR increased 11% (on a reported basis) year over year to $633 million with cloud net expansion rate of 109%. Increasing demand for its cloud solutions acted as the main catalyst.
For fiscal 2025, TDC reiterated its guidance for total ARR growth and cloud ARR growth. Free cash flow guidance was tightened to the high end of the prior range, driven by a strong year-to-date performance. Free cash flow is now anticipated to be in the $260-$280 million range.
At present, TDC sports a Zacks Rank #1. The Zacks Consensus Estimate for its 2025 bottom line is pinned at $2.40, unchanged in the past seven days. The stock has lost 8.1% in the past year.
Price and Consensus: TDC
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This article originally published on Zacks Investment Research (zacks.com).
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