The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to memory and storage devices. Four AI hyperscalers — Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) — raised their AI capital expenditure budget to $725 billion in 2026 from $670 billion estimated earlier.
This will result in more AI semiconductor sales which needs multiple AI memory chips and storage devices to operate. Flash memory technologies like DRAM and NAND are used in AI chips enabling them to perform optimally.
However, the enormous application of AI in day-to-day life has pushed up the demand for memory chips and storage devices. In their last earnings reports, all four hyperscalers mentioned above highlighted a shortage of memory and storage chips, resulting in soaring prices of these products.
At this stage, we recommend three memory and storage stocks for long-term investment. These stocks have soared year to date. Yet, their current Zacks top ranks imply sharp upside in the near term. These are: Micron Technology Inc. MU, Western Digital Corp. WDC and Sandisk Corp. SNDK. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology Inc.
Micron Technology is benefiting from the rapidly expanding AI-driven memory and storage markets. MU has become a leader in the AI infrastructure boom due to strong demand for its high-bandwidth memory (HBM) solutions. Record sales in the data center end market and accelerating HBM adoption have been driving MU’s Dynamic Access Random Memory (DRAM) revenues higher.
The growing adoption of AI servers is reshaping the DRAM market as these systems require significantly more memory than traditional servers. This is boosting demand for both high-capacity DIMMs (Dual In-line Memory Module) and low-power server DRAM.
Image Source: Zacks Investment Research
Micron Technology has an expected revenue and earnings growth rate of more than 100% each, for the current year (ending August 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 0.2% over the last seven days.
Image Source: Zacks Investment Research
Western Digital Corp.
Western Digital has been witnessing strong execution amid intensified cloud and AI demand. WDC saw strong data center demand and increased adoption of high-capacity hard disk drives (HDDs). This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.
