AI-Powered Storage Solutions: Three Data Storage Device Stocks Positioned for 2026 Growth

Market Dynamics Reshaping the Storage Devices Landscape

The proliferation of artificial intelligence, cloud infrastructure expansion, and edge computing deployment are fundamentally transforming how enterprises approach data storage. As organizations increasingly adopt generative AI and agentic systems, demand for sophisticated storage devices continues to accelerate. Companies are leveraging machine learning and AIOps to optimize storage operations, while virtualization and edge computing architectures help mitigate latency challenges. The intersection of IoT proliferation, automotive connectivity, and virtual reality applications has created substantial growth opportunities for storage devices manufacturers positioned at the forefront of this technological shift.

Three Strong Buy Candidates for Portfolio Consideration

Investors seeking exposure to the storage devices sector may consider three companies currently rated as Zacks Rank #1 (Strong Buy): Western Digital Corp. WDC, Seagate Technology Holdings plc STX, and Teradata Corp. TDC. Each plays a distinct role in the storage devices ecosystem, addressing different aspects of enterprise data management and AI infrastructure buildout.

Western Digital: Cloud and AI Execution Excellence

Western Digital’s performance reflects robust execution in response to unprecedented cloud and generative AI demand. The company’s cloud end market—representing 89% of total revenues—experienced a 31% surge in the most recent quarter, driven by enterprise adoption of high-capacity nearline HDDs. WDC has doubled ePMR product shipments, reaching 26TB CMR and 32TB UltraSMR capacity levels, while ramping HAMR drive production for the first half of 2027.

The storage devices market is experiencing a structural shift driven by AI deployment patterns. Western Digital anticipates that generative AI proliferation will catalyze a device refresh cycle across consumer electronics, smartphones, gaming systems, and PCs. Enhanced Storage SSDs are capturing share due to superior speed and reliability characteristics compared to traditional HDDs. Agentic AI systems are expected to drive long-term content creation and storage requirements, positioning storage devices manufacturers favorably.

For fiscal second-quarter 2026, WDC projects revenues of $2.9 billion (±$100 million), representing 20% year-over-year growth. The company’s forward guidance reflects confidence in sustained data center demand and continued adoption of higher-capacity drives. Current-year earnings growth is estimated at 54.8%, while the Zacks Consensus Estimate for earnings has improved 15.3% over the past 60 days, suggesting positive momentum in analyst expectations.

Seagate: HAMR Innovation and Long-Term Visibility

Seagate is capitalizing on global cloud momentum and the rapid scaling of high-capacity HAMR technology. The data center segment generates the majority of STX revenues, with high-capacity nearline production largely committed through 2026 under long-term contracts. This visibility extends into 2027, providing management substantial confidence in sustained demand.

Seagate’s technological roadmap emphasizes advancing aerial density, delivering TCO advantages for storage devices relative to competing solutions. Enterprise customers recognize HAMR drives as the optimal technology for cost-efficient AI data storage at scale. Backing this positioning, STX projects fiscal second-quarter 2026 revenue of $2.7 billion (±$100 million), reflecting 16% year-over-year growth at the midpoint.

Strategic partnerships expand market reach: in September 2025, Seagate announced collaboration with Acronis, combining secure storage solutions with Seagate’s Lyve Cloud platform. The resulting Acronis Archival Storage offering provides S3-compatible infrastructure for managed service providers and regulated enterprises, addressing compliance and cost optimization requirements. Seagate forecasts current-year revenue and earnings growth of 19% and 39%, respectively, with the Zacks Consensus Estimate for earnings improving 2.2% over the last 30 days.

Teradata: Enterprise Data Platform for Agentic AI

Teradata’s value proposition aligns with emerging agentic AI workload requirements. These systems operate continuously with “always-on” query potential, demanding robust enterprise data platforms. TDC positions itself as the premier autonomous AI and knowledge platform capable of managing mission-critical data infrastructure while delivering the performance required by advanced AI systems—whether deployed on-premises or in cloud environments.

Teradata’s product roadmap reflects strategic investment in AI-native capabilities. QueryGrid analytics fabric, the Enterprise Vector Store, AgentBuilder, and ClearScape Analytics with unified ModelOps provide comprehensive solutions for organizations modernizing their data architecture. Recent acquisitions, including Stemma, strengthen capabilities in data search and exploration. The ask.ai feature simplifies natural language interactions, while enhanced ModelOps in ClearScape Analytics provides no-code functionality for rapid AI expansion with enterprise governance.

Enterprise Vector Store technology enables Retrieval-Augmented Generation and agentic AI functionality, supporting real-time decision-making frameworks. These innovations address evolving customer requirements and are expected to drive meaningful ARR growth, cost optimization, and free cash flow generation. Teradata anticipates next-year revenue and earnings growth of -0.6% and 3.3%, respectively, with the Zacks Consensus Estimate for earnings improving 0.4% over the past 30 days.

Investment Thesis: Storage Devices as Core Infrastructure

The three storage devices manufacturers highlighted—Western Digital, Seagate, and Teradata—represent distinct approaches to capitalizing on AI and cloud infrastructure expansion. Each company benefits from structural tailwinds in enterprise data management, with storage devices serving as foundational infrastructure supporting AI deployment at scale. Analyst confidence, reflected in improving consensus estimates, suggests potential for portfolio outperformance in 2026.