Morgan Stanley Bets on Storage Titans as AI Demand Fuels Hardware Rally
Seagate and Western Digital emerged as Morgan Stanley's top hardware picks for 2026, with the investment bank citing hyperscale data center expansion and AI infrastructure spending as catalytic drivers. Western Digital's stock surge—489% over 12 months—reflects a sector-wide revaluation of storage plays amid record cloud demand.
The company's Q2 FY2026 results underscored this thesis: $3.02 billion revenue (up 25% YoY) with 46.1% gross margins as hyperscalers booked 100% of 2026 production capacity. A strategic $3.17 billion SanDisk stake sale in February further strengthened the balance sheet through debt reduction.
Seagate mirrored this momentum, posting $2.83 billion revenue and $3.11 EPS beats. Analysts now view both firms as critical infrastructure suppliers in the AI value chain, though recent tech sector volatility has trimmed Western Digital's gains by 16% from peak levels.
