2 Computer Storage Device Stocks to Buy on Solid Earnings & Guidance

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 spur demand for robust data storage solutions, bolstering computer storage product requirements.

The Zacks-defined Computer – Storage Devices industry is currently in the top 10% of the Zacks Industry Rank. In the past year, the industry has provided an astonishing 133.4% return, while its year-to-date return is an impressive 145.8%. Since it is ranked in the top half of the Zacks Ranked Industries, we expect the EMS industry to outperform the market over the next three to six months.

At this stage, we have narrowed our search to two AI-driven storage device manufacturers to strengthen your portfolio returns in 2026. These companies have posted strong earnings results in the last reported quarters with impressive guidance. 

These companies are: Western Digital Corp. WDC and Seagate Technology Holdings plc STX. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our two picks in the past month.

Western Digital Corp.

Western Digital reported second-quarter fiscal 2026 non-GAAP earnings of $2.13 per share, surpassing the Zacks Consensus Estimate of $1.95. The bottom line expanded 78% year over year. The company posted quarterly revenues of $3.02 billion, surpassing the Zacks Consensus Estimate by 2.24%. This compares to year-ago revenues of $4.29 billion.

WDC has been witnessing strong execution amid intensified cloud and AI demand. Revenues from the Cloud end market (89% of total revenues) climbed 28% year over year, driven by strong demand for higher-capacity nearline products. Revenues from the Client end market (6%) were up 26% year over year. Revenues from the Consumer end market (5%) fell 3% year over year.

Robust Product Portfolio

Western Digital witnessed strong data center demand and increased adoption of high-capacity hard disk drives (HDDs). This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.

As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. WDC is meeting this demand through close collaboration with hyperscale customers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership. 

WDC is advancing areal density gains, accelerating its HAMR and ePMR roadmaps, and driving adoption of higher-capacity and UltraSMR drives. During the quarter, it shipped more than 3.5 million latest-generation ePMR drives, supporting up to 26TB CMR and 32TB UltraSMR capacities, underscoring strong customer adoption. WDC shipped a total of 215 exabytes to customers, marking a 22% year-over-year increase. 

Future Catalysts

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. The 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. 

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.

Solid Guidance

Western Digital expects continued momentum in the fiscal third quarter, supported by sustained data center demand and further adoption of high-capacity drives. At the midpoint of guidance, the company expects non-GAAP revenues of $3.2 billion (+/- $100 million), up 40% year over year. Management projects non-GAAP EPS of $2.30 (+/- 15 cents).

WDC expects non-GAAP gross margin in the range of 47-48%. Non-GAAP operating expenses are expected to be between $380 million and $390 million. Interest and other expenses are anticipated to be approximately $50 million.

Strong Estimate Revisions

Western Digital has an expected revenue and earnings growth rate of -9.3% and 57.8%, respectively, for the current year (ending June 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 1.4% over the last 30 days. 

WDC has an expected revenue and earnings growth rate of 18.3% and 50.2%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 15.5% over the last 30 days. 

The stock has a long-term (3-5 years) EPS growth rate of 29.3%, higher than the S&P 500’s growth rate of 16.1%.

Seagate Technology Holdings plc

Seagate Technology reported second-quarter fiscal 2026 adjusted EPS of $3.11, surpassing the Zacks Consensus Estimate of $2.83 and the year ago EPS of $2.03. The company posted quarterly revenues of $2.83 billion, surpassing the Zacks Consensus Estimate by 2.7%. This compares to year-ago revenues of $2.33 billion.

STX has been witnessing strong execution amid intensified cloud and AI demand. Revenues from the Data Center (79% of total revenues) climbed 28% year over year, driven by continued strong demand from global cloud customers and sequential improvement across enterprise and OEM markets. Revenues from the Edge IoT (21%) were up 2% year over year, supported by expected seasonal strength in consumer products within the VIA client market.

Robust Product Portfolio

In the reported quarter, Seagate Technology shipped 190 exabytes of HDD storage, up 26% year over year and 5% sequentially. The data center market accounted for 87% of shipments, driven by sustained demand from global cloud customers and sequential growth in enterprise OEM markets. STX shipped 165 exabytes to data center customers, up 4% sequentially and 31% year over year.

The December quarter showed steady growth in high-capacity nearline driving demand across global cloud customers and continued improvement at the enterprise edge — a momentum STX expects to sustain given its robust build-to-order pipeline.

In the last reported quarter, average nearline drive capacity increased 22% year over year to nearly 23 TB per drive, with even higher averages for cloud customers, highlighting strong adoption of higher-capacity products. Meanwhile, revenue per terabyte remained stable, reflecting disciplined pricing and positioning STX to benefit from strong secular demand and tight supply.

Future Catalysts

Management highlighted that modern data centers increasingly need solutions that balance performance with cost efficiency, a trend that strongly favors Seagate’s roadmap. STX’s areal-density-driven strategy aligns well with the long-term growth of AI-generated data, suggesting sustained demand beyond short-term cycles.

STX’s high-capacity nearline production is largely booked through 2026, with long-term contracts providing strong demand visibility through 2027. Advancing aerial density remains a major strength for STX and a key driver of progress across the entire hard drive industry. 

STX’s aerial density roadmap ensures a lasting TCO advantage for hard drives over alternative technologies. Customers recognize the value of higher-capacity HAMR drives as the most efficient solution to meet growing AI-driven data storage demands.

In September 2025, STX announced an alliance with Acronis to provide MSPs and enterprises with secure, scalable storage for AI-driven data growth. Seagate and Acronis will offer Acronis Archival Storage, a secure, compliant, cost-efficient S3 solution using Seagate’s Lyve Cloud. Designed for MSPs and regulated sectors, it provides long-term data storage with enterprise-grade security, predictable costs and full compliance support.

Solid Guidance

Seagate Technology expects demand to remain strong, especially from global cloud customers, and is likely to more than offset the typical March-quarter seasonality in the Edge IoT markets. For the fiscal third quarter, STX expects revenues of $2.9 billion (+/- $100 million). At the midpoint, this indicates a 34% year-over-year improvement.

Non-GAAP earnings are expected to be $3.40 per share (+/- 20 cents). For the quarter, non-GAAP operating expenses are expected to be around $290 million. At the midpoint of revenue guidance, non-GAAP operating margin is projected to increase to approximately 30%. STX expects free cash flow to increase further in the March quarter.

Strong Estimate Revisions

Seagate Technology has an expected revenue and earnings growth rate of 24.6% and 52.6%, respectively, for the current year (ending June 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 6.5% over the last seven days. 

STX has an expected revenue and earnings growth rate of 22.3% and 48.7%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 8.6% over the last seven days. 

The stock has a long-term (3-5 years) EPS growth rate of 38%, higher than the S&P 500’s growth rate of 16.1%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research