After years of enthusiasm surrounding high-tech artificial intelligence advancements, a surprising twist has emerged in the stock market, with traditional technology companies taking center stage. Seagate Technology Holdings Plc (STX), known for manufacturing hard disk drives, has emerged as the leading stock in the S&P 500 Index in 2025, boasting an impressive increase of 156%. Close behind, Western Digital Corp. (WDC) has experienced a 137% rise, while Micron Technology Inc. (MU), the largest memory chip manufacturer in the U.S., saw its stock climb by 93% after a robust 12-day winning streak.
For investors optimistic about the tech sector, this unexpected surge in these historically stable companies signals a burgeoning demand for AI-related hardware. Major tech giants like Microsoft Corp. and Alphabet Inc. are heavily investing in infrastructure to accommodate advanced AI applications, spending tens of billions on semiconductor production, networking equipment, and power for data centers essential for training artificial intelligence models.
While entities like Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. see their market valuations soar into the trillions, other players in the AI device ecosystem, like Seagate and Western Digital, are often overlooked. Their products, hard disk drives, have evolved significantly since their inception in the 1950s, transitioning from heavy, limited data storage to compact, high-capacity options critical for modern computing. Similarly, Micron’s high-bandwidth DRAM memory plays a crucial role in AI processing but doesn’t inspire much excitement among casual investors.
Some experts caution against getting swept up in the AI frenzy. Kim Forrest, founder of Bokeh Capital Partners, acknowledges her holdings in Micron due to its competitive position in the memory market but remains wary of the overall hype surrounding AI, suggesting that its true potential may take longer to materialize than anticipated. She warns that investing in companies specifically geared towards AI could turn into a precarious gamble.
The AI boom has unexpectedly revitalized interest in traditionally quiet sectors. Utility producer Vistra Corp. (VST) has surged 53% this year, building on outstanding annual performances in the previous years. Chipmaker Broadcom Inc. (AVGO) now boasts a market value of $1.6 trillion after gaining nearly 100% in each of the last two years. Meanwhile, Oracle Corp. (ORCL), primarily known for its database business, has experienced robust growth in cloud-computing services, becoming one of the top ten valuable companies in the S&P 500.
Despite the impressive upward momentum, Seagate, Western Digital, and Micron are still among the lower-priced stocks within the S&P 500 index, often due to their cyclical business models and limited exposure in the broader investment community. All three companies have shown profitability but faced annual losses in the preceding years. Their valuations, while rising, still remain below the average for the S&P 500, which is priced at 23 times projected profits for the coming year.
Analysts, like Benchmark Co.’s Mark Miller, see growth potential for Seagate, revising price targets upwards amid a promising demand outlook. Seagate’s projected revenue increase of 16% for fiscal 2026, paired with strong pricing strategies, presents a favorable scenario. Western Digital and Micron are also expected to experience significant revenue growth, with Micron forecasted to increase revenue by 48% this year.
However, the rapid ascent of these stocks has led some financial professionals to advise caution. Historical patterns suggest that cyclical stocks often reach peaks at low multiples and hover at their troughs during negative earnings periods. Thus, the prevailing market momentum may indicate that it’s time for some investors to consider taking profits, given the swift rise of Seagate, Western Digital, and Micron in the current landscape.
