A shift in hardware investment is seen as the focus moves from processors to data storage. SanDisk and Western Digital stocks surged in January 2026, reflecting institutional investors’ realization of the importance of data capacity in AI models. Semiconductor manufacturing faces a supply shock due to the prioritization of High Bandwidth Memory (HBM) production.

SanDisk benefits from the need for fast storage in AI training, leading to revenue growth and margin expansion. The company’s streamlined identity and high fixed costs contribute to earnings growth. Western Digital, as a pure-play HDD manufacturer, offers stability and income generation with an increased dividend. The company’s HAMR technology ensures relevance in data storage.

The memory industry is undergoing a structural shift, with constraints on silicon wafers affecting pricing power for memory manufacturers. Investors can choose between SanDisk’s growth potential driven by AI processing needs or Western Digital’s stable income and technical lead in HDD technology. The memory chip shortage continues to impact the electronics market, making storage the new focal point in 2026.

Read more at Nasdaq: Forget the Chips, Buy Memory: Why AI Money Is Moving to Storage