When a stock is up 230% in a year, the natural reaction is to assume you missed it. That's where Western Digital Corp. (WDC), Seagate Technology Holdings plc (STX), and SanDisk Corp. (SDNK) sit right now — each posting triple-digit returns as anything connected to AI infrastructure has soared.
But Bank of America thinks the memory and storage trade might not be over. In fact, the bank argues this rally isn't just momentum-chasing hype. It's a structural story: AI demand is still running ahead of supply, pricing is holding firm, and there's room for another leg up.
Why Bank of America Still Likes Memory Stocks Here
On Tuesday, Bank of America analyst Wamsi Mohan reiterated Buy ratings on both Western Digital and Seagate, while hiking price targets to reflect what he sees as improving fundamentals across the storage sector.
For Western Digital, Mohan lifted his price target from $197 to $257 — implying another 16% upside from current levels. His reasoning? "Increased confidence in revenue growth and margin expansion," plus "increased confidence in positive estimate revisions over the longer term."
Bank of America expects WDC to ship more than 200 exabytes per quarter throughout calendar 2026. That volume is being driven by AI workloads, cloud computing, and storage-heavy enterprise applications that keep piling on demand.
"We see pricing stable or higher," Mohan said. "Demand continues to outpace supply, and $/terabyte is flat to up year over year."
Gross margins are projected to climb every quarter in 2026, eventually hitting around 50%. Management expects compound annual demand growth of 20%, underpinned by long-term purchase agreements. Five major customers have already locked in orders through the end of 2026, with one customer extending visibility into 2027.
Bank of America is forecasting 2026 revenue to jump 25% year over year to $11.9 billion, while earnings per share could surge 56% to $7.87. Estimates for 2027 and 2028 EPS were also bumped up to $9.91 and $10.93, respectively.
The takeaway: Western Digital has multiple customers placing orders that cover all of 2026, with some extending into 2027. That's the kind of demand visibility that makes analysts feel comfortable raising numbers.
Seagate Gets an Even Bigger Boost
For Seagate, Mohan raised his target from $320 to $400 — implying 22.6% upside. His case was simple: "demand strong, supply constrained, pricing momentum continues."
Bank of America expects Seagate to deliver a strong fiscal second quarter, with data center demand staying robust even as legacy markets soften. But the bigger story is that Seagate has serious pricing power because the company is running in a tight-capacity environment.
"STX is basically running at max utilization," Mohan wrote. Any extra supply the company manages to bring online "can be sold at market price (higher than contract price)" — a dynamic that can keep delivering upside surprises even after a massive rally.
Margins are expected to keep climbing too. Bank of America sees gross margin expanding sequentially in every quarter of fiscal 2026, with incremental margins staying elevated.
On the product side, Bank of America highlighted Seagate's ramp in HAMR technology, estimating shipments of about 40 exabytes of HAMR in the quarter and roughly 1.3 million HAMR units. Multiple global cloud service providers have already qualified its Mozaic platform, with more qualifications expected in the first half of 2026.
The Bottom Line
Bank of America's argument is that the storage trade isn't "done" just because the stocks have already ripped higher. Instead of signaling overheating, this corner of the AI infrastructure buildout may actually be in the early innings of a structural upcycle.
The analysts point to earnings power that's still building: volumes are rising, pricing is firm, and margins are expanding quarter after quarter.
As long as AI-driven infrastructure demand keeps outpacing supply, this looks less like a late-cycle hardware peak and more like a scarcity-driven infrastructure cycle — one where the upside is still grounded in fundamentals, not just hype.
