Not Micron. Not Sandisk. This Storage Stock Is Riding the Same AI Infrastructure Wave.

When it comes to artificial intelligence (AI) infrastructure stocks, Micron Technology and Sandisk have been getting plenty of attention this year. Both are benefiting from the massive demand for memory and storage driven by the global expansion of AI data centers.

While Micron manufactures memory chips and Sandisk specializes in flash storage, Western Digital (NASDAQ: WDC) makes the high-capacity hard disk drives (HDDs) that cloud computing companies use to store enormous amounts of information.

It's a different part of the AI infrastructure business but one that's becoming increasingly important as companies build more powerful AI systems. And that's why I think Western Digital deserves a closer look. The stock is up more than 100% so far this year, with plenty more room to run.

Image source: The Motley Fool.

AI needs more than powerful processors

Companies like Nvidia, Broadcom, and Advanced Micro Devices get a lot of attention surrounding AI infrastructure because they make powerful processors essential to allowing AI models to process information quickly.

But what happens to all that information after it's processed?

AI companies need somewhere to store training data sets, model outputs, historical records, and the enormous amounts of new information their systems generate. And keeping everything on expensive, high-performance flash storage isn't necessarily practical.

Western Digital's HDDs are important because traditional hard drives -- while slower than solid-state drives (SSDs) -- can store large amounts of information at a lower cost.

A Western Digital customer survey released in May found that 87% of respondents prioritized expanding storage capacity and reducing total ownership costs. Among respondents who knew their storage mix, 70% reported that hard drives accounted for more than half of their storage capacity.

That helps explain why HDDs aren't becoming obsolete as AI expands. They're serving a different purpose.

Western Digital is expanding its storage capabilities

Western Digital is also developing new technology to make its drives more attractive to cloud computing companies.

In February, the company announced a roadmap that includes hard drives capable of storing more than 100 terabytes of information. It also introduced a 40-terabyte drive that's undergoing customer qualification. (A terabyte is about 1,000 gigabytes.)

Demand for additional storage doesn't appear to be slowing. A September IDC study sponsored by Western Digital found that 61% of surveyed organizations experienced at least 25% data growth over the previous year due to AI. Nearly three-quarters expected similar growth over the next three years.

Western Digital stock at a glance

Shares of Western Digital are up 105% so far this year -- not as much as Sandisk and Micron but still much better than the broader index.

Revenue for the company's fiscal fourth quarter (ending July 3) was $3.75 billion, up 44% from a year ago and 12% from Q3. The company continued to improve its margins, which increased from 41% to 54.1% over the last year, and generally accepted accounting principles (GAAP) net income was $3.19 billion, a whopping 1,215% increase from a year ago. Notably, much of that increase was attributable to Western Digital's interest in Sandisk, which the company spun off in 2025. Western Digital recorded a $2.05 billion gain from Sandisk. Adjusted net income, which is more representative of the company's hard-drive business, was $1.38 billion, up 130% from a year ago.

For the full fiscal year, Western Digital had revenue of $12.92 billion, up 36% from fiscal 2025, and adjusted earnings of $3.88 billion, up 120% from the previous year.

Why I like Western Digital right now

I love AI infrastructure stocks because you can invest in the industry's expansion without having to predict which AI platform will eventually dominate the market.

Whether companies are training new AI models, operating cloud computing platforms, or deploying AI applications for their customers, they're generating information that needs to be stored. And Western Digital is building the high-capacity drives that can handle much of that demand at a relatively low cost.

I don't see the demand for data storage from AI disappearing anytime soon. Micron and Sandisk have demonstrated just how attractive the memory and storage markets can be for investors. Western Digital is participating in that same infrastructure expansion even if its products don't get the same attention.

For investors seeking another way to participate in the growth of AI infrastructure, I think Western Digital makes a compelling case.

Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Micron Technology, Nvidia, and Western Digital. The Motley Fool has a disclosure policy.