U.S. storage stocks rose across the board, with Western Digital, Seagate, and SanDisk surging to new highs, and Micron joining the "500 billion dollar club."

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The AI-driven wave of demand for storage chips is pushing the entire sector to new heights.

At the close of U.S. stock markets on Tuesday, the storage and data storage sector surged across the board. Micron Technology's market value closed above $500 billion for the first time, officially joining the ranks of the 16 most valuable companies in the S&P 500. SanDisk, Western Digital, and Seagate also hit record highs.

The core catalysts driving this round of gains come from multiple directions. On Monday after the bell, Micron announced that its HBM4 high-bandwidth memory chips for Nvidia's next-generation Vera Rubin AI platform have entered mass production, dispelling doubts about its ability to supply this platform. Meanwhile, SK Hynix Group Chairman Chey Tae-won stated on Monday that the global chip wafer shortage is expected to persist until 2030, with the shortage possibly exceeding 20%. He also hinted at a new plan to stabilize DRAM prices, further boosting market sentiment.

The combined effect of these news events benefited the entire storage sector. Western Digital jumped more than 9%, Seagate Technology rose more than 5%, Micron gained more than 4%, SanDisk's five-day cumulative increase reached 19.52%, and its year-to-date rise was as high as 196%. Morgan Stanley's chief U.S. equity strategist Mike Wilson had previously warned that the storage sector had "cooled," but the current market trend is in sharp contrast to this assessment.

Micron closes above $500 billion market cap for the first time

Micron Technology closed at $461.69 on Tuesday, with a market value of $519.64 billion. According to Dow Jones market data, this is the first time the company surpassed the $500 billion threshold at the close. In the previous trading day, Micron briefly hit this milestone intraday, but did not hold through the close.

This achievement makes Micron one of only 16 members of the S&P 500 index with a market value at or above $500 billion. Notably, Micron crossed the $400 billion mark for the first time just two months ago. The rapid expansion reflects the high optimism surrounding AI storage demand.

Micron's announcement of HBM4 mass production after hours on Monday was the direct trigger for this rise. Currently, there are only three manufacturers worldwide capable of producing HBM4: Micron, Korea's SK Hynix, and Samsung Electronics. As AI model sizes continue to grow, demand for this high-end storage product is surging dramatically.

Tight supply-demand supports upward momentum

Several analysts believe that supply-demand imbalance in the storage market will provide ongoing pricing power for companies like Micron. Deutsche Bank analyst Melissa Weathers stated in last week's report that supply tightness in the DRAM market is expected to last until 2027, especially since HBM products require far more silicon wafers than traditional DRAM, which will drive up Micron's overall DRAM business average prices, revenue, and profit margins.

Rosenblatt analyst Kevin Cassidy expects the current upward cycle to last at least until fiscal Q4 2026, due to "meaningful new wafer capacity" not being released until mid-next year at the earliest. Micron's newly acquired Taiwan Licheng Semiconductor P5 facility in Tongluo is expected to start supporting "meaningful" shipment volumes only by fiscal year 2028.

RBC analyst Srini Pajjuri said in a Sunday report that even if PC and smartphone demand declines, it will likely be "significantly offset" by AI and data center demand. He noted that data centers now account for more than half of DRAM market revenue, and HBM and DDR memory demand is expected to persist until 2027.

SK Hynix's remarks reinforce sector outlook

SK Group Chairman Chey Tae-won's public statement on Monday provided additional fundamental support to the storage sector. He expects the global chip wafer shortage to continue until 2030, with the shortage possibly exceeding 20%. This view aligns closely with analysts' predictions of tight supply, further boosting market confidence in rising storage prices.

Chey also revealed that SK Hynix is evaluating the issuance of American Depositary Receipts (ADRs) in the U.S. to broaden its global investor base. In addition, he hinted that the company CEO is about to announce a new plan to stabilize DRAM prices, drawing widespread market attention.

As a core supplier of Nvidia's HBM chips, SK Hynix is currently at the forefront of the AI chip demand boom. Chey's remarks, together with Micron's HBM4 mass production announcement, serve as dual catalysts for the latest sector rally.

SanDisk leads gains as sector challenges "cooling theory"

Within the broader storage sector, SanDisk's performance stands out. The flash memory-focused company saw a five-day cumulative gain of 19.52%, year-to-date increase of about 196%, and a 12-month total rise of roughly 1184%. Western Digital and Seagate Technology have seen five-day gains of about 17.17% and 9.92% respectively, and both companies recorded triple-digit gains over the past year.

This stands in stark contrast with Morgan Stanley chief U.S. equity strategist Mike Wilson's recent outlook. In his latest market comment, Wilson said former leading sectors like storage "have noticeably cooled recently," and warned investors to brace for a possible "final dip" or "capitulation shock," with triggers including a hawkish Fed, inflation concerns, and rising geopolitical tensions.

However, current market data shows that the expected pullback in the storage sector has not materialized, and investors holding positions are continuing to benefit. Wilson also noted that once the market hits a clear low, investors should "be prepared to increase risk exposure before the bull market resumes."

Earnings window approaches as market awaits confirmation

Micron will release its quarterly earnings report on Wednesday (March 18), and market sentiment has already heated up. According to analysts compiled by FactSet, Micron's Q2 fiscal 2026 revenue is expected to reach $19.8 billion, up about 145% year over year; adjusted earnings per share are projected at $9.19, net profit at about $10.3 billion, up approximately 489% year over year.

Cassidy noted that investors will focus on two major topics: First, whether Micron can maintain pricing terms in its long-term supply agreements with customers as it expands wafer capacity; second, whether high storage prices are already causing demand erosion, i.e., some customers turn to alternatives or delay purchases due to high costs.

Micron also announced on Sunday it has completed the acquisition of Taiwan Licheng Semiconductor's P5 facility in Tongluo, Taiwan, which will expand its cleanroom capacity in Taiwan and provide additional space for DRAM product manufacturing, including HBM.

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