Why are Western Digital and Seagate considered good investment opportunities?

Due to rising demand for high-capacity storage from data centers supporting AI, leading to revenue growth, margin expansion, and earnings improvement.

Should investors sell NVIDIA and buy these stocks instead?

No, the article does not recommend that. It highlights potential opportunities in storage stocks, but NVIDIA remains a key AI play.

Everyone's Buying NVIDIA, but 2 Smaller AI Stocks Could Soar Higher

As investors flock to NVIDIA, analysts at Zacks suggest that Western Digital and Seagate, two smaller storage companies, could see even greater upside fueled by AI-related storage demand, strong revenue outlooks, and expanding margins.

July 16, 2026

2 min read

Source: Zacks

While NVIDIA captures the spotlight with its dominance in AI chips, Zacks analysts point to two smaller storage companies that may outperform. Western Digital (WDC) and Seagate (STX) are benefiting from surging AI-driven demand for data storage, with strong revenue forecasts, margin expansion, and earnings growth.

Details

According to a Zacks report, demand for high-capacity storage solutions from data centers supporting AI applications is driving revenue growth for both Western Digital and Seagate. Both companies have shown improved operating margins, boosting earnings expectations.

Context

While the market focuses on NVIDIA (NVDA) as a primary AI beneficiary, storage companies like Western Digital and Seagate represent less obvious but promising investment opportunities. Both stocks have performed well recently, with expectations of continued upside.

What This Means for Investors

Although NVIDIA remains the most popular AI play, diversifying into AI-related storage stocks could offer attractive returns. However, investors should assess risks including market volatility and competition in the storage sector.

Frequently Asked Questions

Western Digital (WDC) and Seagate (STX) are the two smaller stocks that analysts believe could see higher gains due to AI-driven storage demand.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.