A 39-fold increase in one year, can you still buy stocks in the storage sector?

The S&P 500 has risen 28% over the past 12 months, while Nvidia has increased by 73%. But compared to the storage sector, these gains are still modest. SanDisk was $34.61 a year ago, and today it’s $1,406.32, a surge of 39 times.

This NAND flash manufacturer, spun off from Western Digital just 14.5 months ago, is the best-performing individual stock in the U.S. stock market so far in 2026, soaring 492% this year. Behind it, Micron, Seagate, and Western Digital, the four major U.S. storage manufacturers, have YTD gains ranging from 124% to 492%, with the lowest outperforming Nvidia by 23 times. The “AI revolution’s” “selling shovel” label is shifting from GPUs to memory and storage.

The most notable day was May 5. SanDisk jumped 11.98%, Micron 11.06%, Western Digital 5.18%, and Seagate 4.38%. Of the four U.S. storage stocks, three hit 52-week highs.

The catalysts were two earnings reports and a supply story. On April 28, Seagate announced Q3 FY26 revenue up 44% year-over-year, with a gross margin of 47%, a record high. CEO Dave Mosley said in the earnings call, “AI has ushered Seagate into a new era of structural growth,” with nearline exabyte capacity allocated through 2027.

Two days later, SanDisk reported Q3 FY26 revenue of $5.95 billion, up 252% YoY, exceeding guidance by $1.15 billion. Data center revenue soared 645% YoY and nearly doubled sequentially, with Q4 guidance up another 308% to 334% YoY. Coupled with Micron’s credit rating upgrade by Fitch, the entire sector surged on Monday.

But that’s surface level. Looking at the four stocks side by side, “the entire storage sector rising” is actually a misleading summary. They are driven by three completely different supply stories, with vastly different gains.

From the YTD performance, SanDisk +492.43%, Seagate +180.46%, Western Digital +170.21%, Micron +124.40%, spread across four entirely different tiers. Meanwhile, the S&P 500 rose only 6.04%, and Nvidia 5.37%. The latter even fell 7.82% over the past five days. The “AI first beneficiary” label is shifting: the GPU story driven by large model training has completed its valuation expansion cycle over the past year, and money is now flowing downstream into memory and storage that support AI workloads.

This tiering isn’t uniform. It’s layered along the medium’s properties.

Recent quarterly financials clearly illustrate this layering. SanDisk’s NAND revenue is up 252% YoY; Micron’s DRAM/HBM revenue is up 196%; Western Digital and Seagate’s HDD revenue is around 44-45% YoY. NAND and DRAM are the explosive segments of this cycle, HDD is a steady growth segment, with a 4- to 5-fold difference between the two tiers.

Gross margin layering is even more dramatic. Micron’s Q2 FY26 gross margin is 74.4%. That’s an extreme figure for a chip manufacturer, meaning that for every $100 of DRAM and HBM sold, $74 hits the profit statement. Seagate’s 47% gross margin, while a record high for it, still lags behind DRAM manufacturers by an order of magnitude. The behind-the-scenes reason is supply structure differences. HBM capacity is concentrated in three companies (SK Hynix, Samsung, Micron), all selling under long-term contracts through 2026. HDD capacity is evenly distributed between Seagate and Western Digital, with relatively dispersed pricing power.

Pricing signals tell the same story.

According to TrendForce’s upward revision of Q1 2026 memory contract prices on February 2, PC DRAM prices rose 100% quarter-over-quarter, server DRAM about 90%, and server LPDDR4X/5X about 90%. All three DRAM categories hit record high price increases. On the NAND flash side, enterprise SSDs increased 53% to 58%, with overall NAND prices up 55% to 60%, only about half the increase of DRAM.

This is the scissors effect that explains everything. AI servers require both NAND and DRAM, but more so bandwidth (HBM) and capacity density (DDR5, LPDDR5X). The supply-demand gap on the DRAM side is much larger than on NAND. Micron CEO’s statement during the Q2 FY26 earnings call, “We’re sold out for 2026,” clearly articulates this supply story. HBM4 36GB 12H has already been mass-produced and shipped for Nvidia’s Vera Rubin platform. Capital expenditure for FY26 has been raised from $20 billion to $25 billion to prepare for an additional tier in 2027.

Among the four manufacturers, the most noteworthy is SanDisk.

SanDisk was spun off from Western Digital on February 24, 2025, and listed on NASDAQ. Its first day opened at $52, closed at $48.60, with a market cap of about $7.2 billion. On the same day, Western Digital closed at $49.02, with a market cap of about $16.9 billion. On the spinoff day, Western Digital’s valuation was 2.3 times that of SanDisk.

Today, 14.5 months later, SanDisk’s market cap is $208.3 billion, and Western Digital’s is $160.4 billion. SanDisk has overtaken Western Digital by 1.3 times. Such inversion is rare in large corporate spinoff histories. Most spinoffs take 3 to 5 years for the subsidiary to rebuild investor confidence and catch up in market value. SanDisk achieved this in just 14.5 months.

The reason is it was spun out at the right time. When Western Digital decided to spin off in 2024, the rationale was “NAND and HDD are in different capital cycles; separate operations will provide clearer valuation.” This judgment was later validated by the market: after becoming independent, SanDisk focused solely on NAND and caught the explosive demand for enterprise SSDs driven by AI data centers. Western Digital focused on HDDs, benefiting from the structural growth of cloud storage archiving. Separately, each company aligns with one story. Had they not split, a company holding two businesses in completely different supply cycles would be valued more conservatively, with a multiple in the middle.

Bain & Company raised SanDisk’s target price from $1,250 to $1,700 on May 4, citing the visibility of its data center SSD business. SanDisk’s earnings report disclosed that it has signed five long-term contracts, received $11 billion in financial guarantees, and over one-third of its NAND bits for FY27 are already locked in by customers. This is a sector traditionally treated as a commodity cycle, but for the first time, a “long-term contract + customer prepayment” structure similar to advanced wafer foundries has emerged.

Overall, the flow of money is from GPUs toward memory. DRAM is the true alpha of this cycle, HDD represents a different rhythm of structural long-term growth, and SanDisk, just 15 months after its spin-off, has surpassed its parent Western Digital in market value by focusing on NAND data centers.

On May 5, the same trading day, Nvidia fell 1.03%, TSMC dropped 1.79%, and SanDisk rose 11.98%. Also benefiting from “AI beneficiaries,” the market is clearly voting with its feet, distinguishing which supply segments are most scarce.