Hard drive companies’ sales are up thanks to AI

The vast data storage requirements of artificial intelligence technology are boosting sales for hard drive companies like Western Digital (WD) and Seagate, with both posting ~30% revenue growth in their latest quarters.

In a major rebound for these firms, WD said it shipped 190 exabytes, which is 32% more than a year before, and Seagate shipped 45% more exabytes in the same period. An exabyte is a billion gigabytes.

Around 90% of WD’s revenue came from cloud computing.

Things weren’t the same a few years back
According to Gartner, global hard-drive revenue declined by 30% in 2023.

But now, users are generating enormous amounts of text, images, and video that need to be stored permanently. Google, for example, reported that its Flow tool produced 100 million AI videos in just three months.

Industry estimates suggest that hard drives are the cheapest option for data centers, and around 80% to 90% of the facilities use them.

Gartner projects global hard-drive revenue to hit $24 billion in 2026, and Seagate and WD will be ready to cash in.

The two companies dominate the market, hold strong pricing power, and are rolling out next-generation HAMR drives capable of 30 terabytes or more.

Despite their newfound importance, investor enthusiasm has been cautious. WD trades at 16 times forward earnings and Seagate at 20, both below the Nasdaq average of 29.