Hardware Stocks Surge as AI Infrastructure Demand Drives Seagate, Western Digital, and Micron to Lead S&P 500

Seagate, Western Digital, and Micron have emerged as the top performers in the S&P 500 in 2025, fueled by soaring demand for AI infrastructure. Seagate's shares have skyrocketed 156% this year, while Western Digital and Micron have posted gains of 137% and 93%, respectively. The rally reflects a broader shift in investor focus from AI HYPE to the physical backbone required to sustain it.

Behind the scenes, tech giants like Microsoft and Alphabet are pouring billions into chips, data centers, and networking gear to support their AI ambitions. This spending has already propelled Nvidia and TSMC to trillion-dollar valuations. Now, the money is flowing downstream to foundational hardware—hard drives and memory chips—manufactured by firms like Seagate and Western Digital.

Once considered relics of the pre-cloud era, these components have become critical for training large language models, which demand vast amounts of storage. Micron, a key player in DRAM production, is also benefiting from the surge in demand for high-performance memory solutions.

Wall Street's rush into hardware stocks underscores a growing recognition: AI's future hinges not just on algorithms, but on the unglamorous machinery that makes them possible.