Western Digital Corporation

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Bullish +70

Will 2026’s Top Stocks Keep Riding the AI Infrastructure Boom?

AI-generated analysis

πŸ“ˆ SanDisk led best-performing stocks with a 464.5% rise in 2026, pushing its share price above $1,500 from $34 a year ago.

πŸ”‹ Bloom Energy ranked second on the list, surging 197.7% as the only non-tech company among top AI infrastructure gainers.

πŸ’» Intel followed closely with a 197.1% gain, driven by strong server processor demand and record highs following Apple partnership rumors.

πŸ“Š Hard-disk drive suppliers Seagate and Western Digital each posted approximately 180% gains this year amid AI buildout expansion.

βš™οΈ All five companies are scaling production to meet massive demand for AI-related computer hardware and infrastructure, reporting historic high gross margins.

πŸ“ Morningstar analysts project strong near- and medium-term outlooks due to current earnings visibility, though long-term durability remains a debate.

βš–οΈ Valuation analysis indicates two of the five stocks are trading in overvalued territory while three remain fairly valued according to analysts.

πŸ’° SanDisk's spinoff from Western Digital and new supply agreements have generated billions from NAND flash memory price growth.

πŸ”‹ Bloom Energy expanded its partnership with Oracle to supply 2.8 gigawatts of fuel cell systems, addressing urgent data center power needs.

πŸ‘¨β€πŸ’Ό Analyst Brian Colello raised Intel’s fair value estimate to $90 per share, citing faster-than-expected growth in server processor demand.

⚠️ Risks include potential margin compression and sales declines if commodity prices normalize for SanDisk and other high-margin hardware makers.

πŸ€– Market erosion poses a risk for Intel as hyperscalers develop capable in-house teams to build CPUs, reducing reliance on external chipmakers.

πŸ“ˆ The tight NAND supply environment is driving immense price growth for commodity-like chips as demand outpaces slower supply expansion.

πŸ“‰ AI infrastructure is becoming increasingly commoditized, creating risks if the current supply-demand imbalance shifts against these firms.

πŸ’‘ Morningstar analysts adjusted fair value estimates upward by roughly 50% for Western Digital and Seagate following stellar quarterly results.

Bullish Signals
  • Western Digital (WDC) and Seagate (STX) delivered a stellar quarter on AI momentum, prompting Morningstar analysts to adjust both companies' fair value estimates upward by roughly 50%.
  • Our view now assumes the AI buildout leads to structurally advantaged pricing for hard disk drive makers through at least 2030, potentially driving further share price appreciation.
  • Intel (INTC) posted first-quarter earnings reflecting overwhelming demand for its server processors on the winds of agentic AI expansion, with a record high trading price of $114.51 on May 7.
  • Morningstar senior equity analyst Brian Colello raised his fair value estimate on Intel to $90 per share from $60, noting that server processor demand is poised to grow faster than prior expectations over the next five years.
  • Bloom Energy (BE) saw margins up an astronomical 1,330 basis points year on year to 17.3% while securing an expanded partnership with Oracle (ORCL) to supply up to 2.8 gigawatts of its fuel cell systems by April 13.
  • In the tight NAND supply environment, incremental revenue for SanDisk is effectively pure profit due to rapidly accelerating pricing growth driven by immense price growth for commodity-like chips.
  • Earnings visibility for AI infrastructure stocks is at an all-time high, providing strong near- and medium-term business prospects according to Morningstar analysts.
Risk Factors
  • Analysts express skepticism about SanDisk's claims that this cyclical upcycle is 'different' due to new long-term supply agreements, suggesting potential margin compression and sales declines if AI-driven price normalization occurs.
  • Market erosion poses a significant long-term risk for chip and processor manufacturers like Intel as leading hyperscalers develop capable in-house CPU teams, potentially reducing reliance on external premium vendors.
  • Valuation concerns persist as Morningstar analysts indicate that two of the five top-performing stocks are trading in 'overvalued territory', which could limit upside potential if AI demand slows.
  • The durability of the AI boom remains uncertain for long-term hard disk drive makers, with Morningstar highlighting a key debate on whether current earnings visibility can sustain growth beyond the near and medium term.
  • Western Digital's spin-off from SanDisk in early 2025 is being scrutinized to determine if it successfully separated legacy risks or introduced new vulnerabilities in their market positioning.
Full Analysis
Morningstar analysts highlight five top-performing stocks in the AI infrastructure sector for 2026, led by flash memory provider SanDisk (SNDK), which surged 464.5% to a share price exceeding $1,500 from just $34 a year ago following its spinoff from Western Digital in early 2025. The other four companies are Bloom Energy (BE) at 197.7%, Intel (INTC) at 197.1%, and hard-disk drive suppliers Seagate (STX) and Western Digital (WDC), both rising around 180%. All five are scaling to meet massive demand for AI-related hardware, with several reporting historical high gross margins as they capitalize on supply-demand imbalances in NAND flash and data center power needs. Analysts view near- and medium-term prospects strongly due to elevated earnings visibility, though long-term concerns exist regarding the durability of the AI boom. Western Digital and Seagate have been upgraded by Morningstar with fair value estimates increased roughly 50%, based on fourth-quarter outlooks suggesting demand will accelerate as AI storage needs outstrip supply, potentially through at least 2030 if structural pricing advantages hold. Intel saw its stock hit a record high of $114.51 after reports of Apple considering partnerships for U.S. chip manufacturing, leading analyst Brian Colello to raise his fair value estimate to $90 per share from $60 due to faster-than-expected growth in server processor demand driven by agentic AI expansion. Bloom Energy stands out as the only non-tech company on the list, with margins jumping 1,330 basis points year-over-year to 17.3% as it expands partnerships like a deal with Oracle ORCL to supply up to 2.8 gigawatts of fuel cell systems for data centers that consume power directly onsite. However, risks loom: SanDisk could face significant margin compression and sales declines if incremental revenue from NAND price growth normalizes, while Intel risks losing customers as hyperscalers build in-house CPU capabilities. Morningstar analyst Eric Compton notes that while current earnings visibility is at an all-time high, the industry's increasing commoditization poses long-term threats if supply-demand imbalances shift or pricing power erodes without lasting structural advantages.