Western Digital reported results that beat expectations, raised its dividend, and watched its shares drop 3% the next day. That is the state of memory and storage stocks right now.
The company’s results and forecast came late on a Thursday. By Friday, investors were worried that spending on artificial intelligence had peaked, Bloomberg reported.
Sandisk, Micron, Seagate and Western Digital were among the market’s biggest winners in the first six months of 2026, when demand from the AI build-out looked insatiable. Momentum has since turned. Investors are questioning how long the massive spending commitments will last, and all four stocks sit in the bottom 10% of the S&P 500 Index for the second half of the year.
Micron shows the same pattern. At the end of September it beat projections for profit and revenue and gave an outlook far better than expected. The stock is down 15% since.
“The market is telling you that expectations are changing for how long the earnings boom is going to last for these companies,” said Joe Tigay, a portfolio manager at Equity Armor Investments.
Two more reports this week
Seagate reports after the close on Tuesday, and analysts expect its net income to triple. Sandisk follows on Thursday, with earnings per share projected to climb more than 6,100%.
Andre Bakhos, president of Ingenium Analytics, doubts that numbers alone will do it. “Now that the trade has gotten long in the tooth, what can turn it around?” he said. “Not only will you need great earnings, but you’ll need to see follow-through next quarter and the one after that.”
The spending behind the trade shows no sign of slowing. Meta Platforms raised its capital expenditure plans for the year last week. Wall Street expects Microsoft, Amazon.com and Alphabet to affirm or raise their AI budgets when they report this week.
On Monday, Anthropic PBC filed for its long-awaited initial public offering. The filing is expected to demonstrate the enduring strength of the AI trade and send memory and storage stocks higher.
