Zacks Industry Outlook Highlights Western Digital, Sandisk and Netlist

For Immediate Release

Chicago, IL – March 12, 2026 – Today, Zacks Equity Research discussesWestern Digital WDC, Sandisk Corp. SNDK and Netlist, Inc NLST.

Industry: Storage Devices

Link: industry-gains-momentum

Accelerating digital transformation, edge computing, the proliferation of AI workloads and enterprise cloud adoption are driving demand for reliable, scalable and cost-efficient data storage solutions, supporting long-term growth for the Zacks Computer-Storage Devices industry. As hyperscalers double down on AI clusters, companies like Western Digital are benefiting from orders for high-capacity hard disk drives (HDDs) and enterprise solid-state drives (SSDs) and emerging storage architectures. HDDs remain the most reliable and economical solution for mass data storage, forming the backbone of global data infrastructure.

As cyberattacks continue to increase in frequency, the demand for end-to-end encryption will also drive growth in secure storage solutions. These factors propel the demand for sophisticated data storage solutions, bolstering computer storage product requirements. These factors are favorable for prominent industry players like Sandisk Corp., Western Digital and Netlist, Inc. Escalating trade tensions, especially with China and their impact on global supply chains, along with global macroeconomic turbulence and associated inflation, remain headwinds.

Industry Description

The Zacks Computer-Storage Devices industry houses companies that design, develop, manufacture and market various HDDs and SSDs. These drives are utilized in PCs, laptops, mobiles, servers, network-attached storage devices, video game consoles, digital video recorders and other consumer electronic devices. Some industry participants, including Pure Storage, provide software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Many industry players offer high-performance modular memory subsystems, mount and blade server systems, enterprise storage and data management software, and hardware products and services. Some industry participants also provide purpose-built servers for storing and accessing data over a shared network or the Internet.

3 Trends Shaping the Computer-Storage Industry's Future

AI’s Impact on the Storage Devices Industry: Rapid proliferation of AI is overhauling the entire tech landscape. AI workloads like training large language models and running inference are driving demand for high-speed, high-capacity and low-latency storage solutions. Traditional storage architectures are insufficient for the data throughput required by AI applications, prompting a transition toward NVMe-based SSDs (PCIe Gen 4/5/6), software-defined storage and storage class memory. Object storage is best suited for storing unstructured data, a common prerequisite for AI workloads. Other fast-emerging solutions include Parallel File Systems Optimized for AI and QLC NAND SSDs for AI Data Lakes.

According to a report from Gartner, worldwide IT spending is projected to reach $6.15 trillion in 2026, calling for an increase of 10.8% from 2025 levels. Spending on AI-related hardware and software continues to be accelerating added Gartner, while server spending is anticipated to surge 36.9% year over year in 2026.

Innovation in Cloud Storage Technologies to Drive Adoption: Broader storage options from collocated hardware (such as hard disks and tape drives) to many cloud storage solutions have put the industry on a growth trajectory. Industry players are well-poised for growth owing to a rapid increase in data, the complexity of data formats and the need to scale resources at regular intervals. These companies rely on AI for IT Operations and machine learning to manage and optimize storage solutions.

To streamline data storage, companies are focusing on virtualization technologies. As more data is added from IoT, companies are turning to edge computing architecture to reduce latency and boost flexibility.

Moreover, increasing uptake of containerized applications is accelerating demand for Kubernetes-native storage solutions that enable greater scalability, portability and automation across cloud environments. These trends support wider deployments of scalable enterprise and hyperscale storage systems. The industry’s focus is shifting from one-time hardware sales to recurring, usage-based revenue streams as cloud-native storage models (object storage and Storage-as-a-Service) gain traction.

Macro Conditions Remain Concerns: Escalating trade tensions and tariffs are emerging as a key concern. These are weighing heavily on global macroeconomic conditions and can disrupt supply-chain dynamics. Uncertainty in the macro backdrop and inflationary pressure could affect spending across small and medium-sized businesses globally. The uncertainty in business visibility could dent the industry’s performance in the near term.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Computer Storage is housed within the broader Zacks Computer and Technology Sector. It carries a Zacks Industry Rank #23, which places it in the top 9% of more than 243 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few stocks that you may want to consider for your portfolio, due to bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.

Industry Outperforms the S&P 500 and the Sector

The Zacks Computer-Storage Devices industry has outpaced the S&P 500 composite and the broader sector in the past year.

The industry has risen 218.5% in this period compared with the S&P 500’s growth of 24.4% in the past year. The broader sector has gained 34.5% in the same time frame.

Industry's Current Valuation

On the basis of forward 12-month Price/Earnings (P/E), which is a commonly used multiple for valuing computer storage device companies, we see that the industry is currently trading at 14.78X compared with the S&P 500’s 22.01X. This is also below the sector’s forward 12-month P/E of 24.6X.

In the past five years, the industry has traded as high as 24.64X and as low as 9.84X, with the median being 18.01X.

3 Computer-Storage Devices to Add to Portfolio

Sandisk: SNDK was formed after Western Digital completed the separation of its HDD and Flash businesses into two independent, publicly traded companies, each with a specific focus on the respective market. Sandisk manages the Flash business.

Demand for Sandisk’s NAND products continues to exceed supply. Demand for NAND storage products is increasing rapidly as investments in data centers and AI infrastructure ramp up.

AI workloads are significantly increasing the amount of NAND required in data centers, particularly as inference deployments scale. This trend is driving strong demand for enterprise SSDs across edge and enterprise data centers, hyperscalers, OEMs and system integrators.

The company is also benefiting from the qualification of its PCIe Gen5 high-performance TLC drives with multiple hyperscalers. The upcoming launch of its BiCS8 QLC storage-class product, codenamed Stargate, is expected to begin generating revenues in the coming quarters. It is currently advancing through qualification with two key hyperscalers.

Additional tailwinds include PC refresh cycles, rising premium smartphone (newer models with AI capabilities) demand and strong consumer gaming traction.

For the second quarter of fiscal 2026, Sandisk reported revenues of $3 billion, rising 31% sequentially. Adjusted free cash flow reached $843 million. For the fiscal third quarter, it expects revenues to be between $4.4 billion and $4.8 billion.

At present, SNDK flaunts a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for its fiscal 2026 bottom line is pegged at $31.37, up from $27.20 in the past seven days. The stock has surged 1,127% over the past year.

Western Digital: Headquartered in San Jose, CA, WDC is a leading developer and manufacturer of data storage devices and solutions.

As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. Western Digital is meeting this demand through close collaboration with hyperscale customers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership. The company is advancing areal density gains, accelerating its HAMR and ePMR roadmaps, and driving adoption of higher-capacity and UltraSMR drives.

In the fiscal second quarter, it shipped more than 3.5 million latest-generation ePMR drives, supporting up to 26TB CMR and 32TB UltraSMR capacities, underscoring strong customer adoption. The company shipped a total of 215 exabytes to customers, marking a 22% year-over-year increase.

The company reaffirmed its dual-path leadership in ePMR and HAMR, with the 40TB UltraSMR ePMR HDD now in qualification at two hyperscalers and volume production targeted for the second half of fiscal 2026, while HAMR drives are also being qualified, with ramp expected in 2027. The roadmap extends ePMR to 60TB using HAMR innovations without added power and scales HAMR to 100TB by 2029.

Expansion of Platform business and customer-friendly roadmaps are key catalysts. Shareholder-friendly capital returns, with more than 100% of free cash flow returned through dividends and buybacks, bode well. It expects fiscal third-quarter revenues of $3.2 billion (+/- $100 million), up 40%.

At present, WDC sports a Zacks Rank #1. The Zacks Consensus Estimate for fiscal 2026 bottom line for the company stands at $8.96, unchanged in the past seven days. The stock has skyrocketed 519.7% in the past year.

Netlist: Irvine, CA-based Netlist is a leading designer and manufacturer of high-performance SSDs and modular memory subsystems for enterprise customers in various industries.

The company is gaining from the higher demand for advanced memory solutions amid the proliferation of AI workloads. 2025 revenues came in at $188.6 million, up 28% year over year, supported by improved pricing and increasing demand.

A favorable pricing environment is being driven by a global memory supply-demand imbalance. Management noted that the industry shortage is expected to continue through 2026 and into 2027 until new fab capacity comes online.

NLST is developing CXL-based NVDIMM and low-power MRDIMM solutions and has commenced sampling of CXL NVDIMM products to Intel and AMD for next-generation platforms. The company’s Lightning DDR5 line of overclocked, low-latency memory modules is gaining traction among system integrators.

NLST is also pursuing patent litigation and expanded enforcement actions against major players such as Samsung, covering DDR5 and high-bandwidth memory technologies.

At present, NLST holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its 2026 bottom line is pinned at breakeven, improved from a loss of 4 cents in the past 30 days. The stock has inched up 0.2% in the past year.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Western Digital Corporation (WDC): Free Stock Analysis Report

Sandisk Corporation (SNDK): Free Stock Analysis Report

Netlist, Inc. (NLST): Free Stock Analysis Report

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