Storage and memory stocks rallied sharply on Tuesday, driven by continued strength in data center spending and improving supply-demand dynamics across the storage market. SanDisk led the sector higher, signaling renewed investor confidence in companies tied to AI and cloud infrastructure growth.
SanDisk shares jumped 8% in Tuesday’s session, extending the stock’s year-to-date gain to an impressive 87%. Other major players also posted solid advances, with Micron Technology rising 4.7%, Western Digital climbing 2.6%, and Seagate gaining 2%.
The rally followed a bullish call from Citigroup, which raised its price target on SanDisk to $490 from $280 while maintaining a buy rating. Analysts cited strong fundamentals for storage component vendors, supported by tight supply conditions and sustained demand from large-scale data center operators.
Industry expectations point to global data center capital expenditures reaching roughly $600 billion in 2026, marking a 50% year-over-year increase. This surge is being fueled by rising compute needs from hyperscalers, neocloud providers, sovereign entities, and enterprises investing heavily in AI-related infrastructure.
While flash storage players like SanDisk are seen as direct beneficiaries of AI-driven workloads, analysts view hard disk drive manufacturers such as Seagate and Western Digital as less volatile ways to gain exposure to long-term data growth trends. Improved pricing power and margin expansion are expected to persist as demand continues to outpace supply across the sector.
Western Digital, which is up 30% so far this year, could see an additional boost from plans to reduce debt through a debt-equity exchange involving its SanDisk stake. Analysts believe this move would strengthen the company’s balance sheet and improve its overall financial flexibility.
