The "Seven Giants" collectively falter! Wall Street exclaims: The biggest winner in AI has changed hands

Ask AI · Is AI spending freeing memory demand from traditional cycle fluctuations?

CLS, March 25 (Caixin Finance) (Editor Zhao Hao) With the opening of 2026 U.S. stock market turmoil and growing uncertainty, one trade has remained unusually resilient: going long on memory and storage.

Although the share prices of SanDisk, Western Digital, and Seagate Technology have recently pulled back, they are still among the top performers in the S&P 500 index for the year. These companies also delivered standout performance in 2025.

Analysts believe that large-scale investment in the artificial intelligence (AI) sector is creating an “unlimited” demand for the memory and storage components required by data centers.

Tortoise Capital Senior Portfolio Manager Rob Thummel said: “Infrastructure is the core allocation direction right now.” The firm’s Tortoise AI Infrastructure ETF holds stocks in Western Digital, Seagate, SanDisk, and Micron Technology.

The strong performance of these stocks stands in sharp contrast to the “Magnificent Seven” — the latter is down across the board this year, and the composite index for this portfolio has fallen by about 10%.

As more and more AI hyperscale cloud providers see a surge in demand for memory and storage products, memory companies have strong pricing power—also meaning the market may need to reexamine the industry’s past cyclical logic.

Thummel pointed out that these stocks fit the “Halo trade” that Wall Street has been focusing on recently, a “heavy-asset, low attrition rate” investment logic. “On the sell-side are large tech stocks that are performing poorly; while on the buy-side are infrastructure, memory, and data storage.”

This investment logic received further validation last week: Micron Technology issued strong earnings guidance, showing that AI spending is making this industry cycle larger in scale and longer in duration.

This also helps explain why, even as investors begin to question some companies’ aggressive AI investments (including businesses that could be disrupted by technology, and even long-term winners like Nvidia), the memory sector is still favored.

Neuberger Berman semiconductor research analyst Jamie Zakalik said: “The upside for the memory industry is more evident, and these companies also have strong pricing power. While ‘safety’ may not be the most accurate description, compared with other parts of the AI value chain, these firms are easier for investors to understand and price.”

SanDisk is undoubtedly the biggest winner in the S&P 500 over the past two years; since February 2025, it has surged by more than 1,850% cumulatively. Western Digital and Seagate have also landed among the top 20 gainers. Although Micron fell 15% after its earnings report, it is still up nearly 40% since 2026.

By contrast, the S&P 500 is down about 4.5% this year, the Nasdaq 100—led by technology stocks—is down 5%, and the Philadelphia Semiconductor Index is up about 9%.

Of course, the rise in memory prices largely stems from supply shortages. Imbalances between supply and demand have long been the core driver of cycle fluctuations in this industry: rising prices stimulate capacity expansion, and when demand weakens, prices may also plunge.

Ann Miletti, Head of Equity Investments at Allspring Global Investments, said: “Supply is still trying to catch up with demand. Over time, this problem will be resolved—at its core, it’s more a timing issue.”

However, as hyperscale cloud providers continue to invest in building data centers, investors still see further upside potential for the memory sector.

Zakalik said: “There are many reasons to be bullish on memory right now. The AI market is fundamentally different from traditional hardware, and the demand structure for memory is also different. There’s a view that this demand may be more structural—maybe this time really is different.”

Last week, Nvidia CEO Jensen Huang said that in the coming years, AI chip sales are expected to exceed $1 trillion, further indicating that AI spending will continue to drive high demand—which is undoubtedly good news for investors looking to position in the memory sector.

Thummel concluded: “As long as hyperscale cloud providers keep investing and AI applications continue to emerge, I still see upside potential. Jensen Huang talked about future demand, and memory is a key part of that.”

(CLS, Zhao Hao)