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3 Storage Devices Stocks to Focus on Amid Industry Headwinds
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Escalating trade tensions, especially with China, and their impact on global supply chains, along with global macroeconomic turbulence and associated inflation, remain headwinds for the Zacks Computer-Storage Devices industry players. Intense competition is another concern for these companies. Nonetheless, accelerating digital transformation, edge computing, proliferation of AI workloads and enterprise cloud adoption are tailwinds that will support growth for the industry in the long run. As hyperscalers double down on AI clusters, companies like Western Digital are benefiting from orders for high-capacity hard disk drives (HDDs) and enterprise solid-state drives (SSDs).
As cyberattacks continue to increase in frequency, the demand for end-to-end encryption will also drive growth in secure storage solutions. These factors propel the demand for sophisticated data storage solutions, bolstering computer storage product requirements. These factors are favorable for prominent industry players like Pure Storage, Inc (PSTG - Free Report) , NetApp, Inc. (NTAP - Free Report) and Netlist Inc. (NLST - Free Report) .
Industry Description
The Zacks Computer-Storage Devices industry houses companies that design, develop, manufacture and market various HDDs and SSDs. These drives are utilized in PCs, laptops, mobiles, servers, network-attached storage devices, video game consoles, digital video recorders and other consumer electronic devices. Some industry participants, including Pure Storage, provide software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Many industry players offer high-performance modular memory subsystems, mount and blade server systems, enterprise storage and data management software, and hardware products and services. Some industry participants also provide purpose-built servers for storing and accessing data over a shared network or the Internet.
4 Trends Shaping the Computer-Storage Industry's Future
AI’s Impact on the Storage Devices Industry: Rapid proliferation of AI is overhauling the entire tech landscape. AI workloads like training large language models and running inference are driving demand for high-speed, high-capacity and low-latency storage solutions. Traditional storage architectures are insufficient for the data throughput required by AI applications, prompting a transition toward NVMe-based SSDs (PCIe Gen 4/5/6), software-defined storage and storage class memory. Object storage is best suited for storing unstructured data, a common prerequisite for AI workloads. Other fast-emerging solutions include Parallel File Systems Optimized for AI and QLC NAND SSDs for AI Data Lakes.
Innovation in Cloud Storage Technologies to Drive Adoption: Broader storage options from collocated hardware (such as hard disks and tape drives) to many cloud storage solutions have put the industry on a growth trajectory. Industry players are well-poised for growth owing to a rapid increase in data, the complexity of data formats and the need to scale resources at regular intervals. These companies rely on AI for IT Operations (AIOps) and machine learning to manage and optimize storage solutions. To streamline data storage, companies are focusing on virtualization technologies. As more data is added from IoT, companies are turning to edge computing architecture to reduce latency and boost flexibility. Kubernetes storage is becoming increasingly popular as it facilitates greater agility and scalability. This has bolstered the deployment of high-capacity mass storage products, which is a positive for industry players. Moreover, the industry’s focus is shifting from one-time hardware sales to recurring, usage-based revenue streams as cloud-native storage models (object storage and Storage-as-a-Service) gain traction.
Macro Conditions Remain Concerns: Escalating trade tensions and tariffs are emerging as a key concern. These are weighing heavily on global macroeconomic conditions and can disrupt supply-chain dynamics. Uncertainty in the macro backdrop and inflationary pressure could affect spending across small and medium-sized businesses globally. The uncertainty in business visibility could dent the industry’s performance in the near term. According to a report from Gartner, worldwide IT spending is now projected to reach $5.43 trillion in 2025, calling for an increase of 7.9% from the 2024 levels. This is below its January forecast of 9.8% growth. The research firm added that spending on software and services will slow down due to global uncertainty, but AI-related infrastructure spending like data center systems will continue to increase. The Devices segment is expected to grow 5.4% in 2025.
Uncertainty Around PC Shipments: Worldwide PC shipments were up 4.4% year over year in the second quarter of 2025, per a Gartner report. The research firm noted that demand increased due to Windows 11 migrations and pandemic-era desktop renewals. However, Gartner highlighted that shipments could plateau in the second half of 2025. This will mainly stem from vendors' lowered stock in response to demand, leaving excess inventory by year-end.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Computer Storage is housed within the broader Zacks Computer and Technology Sector. It carries a Zacks Industry Rank #189, which places it in the bottom 23% of more than 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, considering bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 but Lags Sector
The Zacks Computer-Storage Devices industry has outpaced the S&P 500 composite but lags the broader sector in the past year.
The industry has risen 22.7% in this period compared with the S&P 500’s gain of 17.8%. The broader sector has gained 28.3% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month P/E (or Price/Earnings), which is a commonly used multiple for valuing computer storage device companies, we see that the industry is currently trading at 21.15X compared with the S&P 500’s 23.32X.This is below the sector’s forward 12-month P/E of 28.93X.
In the past five years, the industry has traded as high as 194.54X and as low as 10.32X, with the median being 18.04X, as the charts below indicate.
Forward 12-Month Price-to-Earnings (P/E) Ratio
Forward 12-Month P/E Ratio
3 Computer-Storage Devices to Add to Watchlist
Netlist: Irvine, CA-based Netlist is a leading designer and manufacturer of high-performance SSDs and modular memory subsystems for enterprise customers in various industries.
In the last reported quarter, NLST’s revenues jumped 44% sequentially and 13% year over year to $41.7 million, driven by growing demand for DDR5 and continued strength in custom DDR4 modules. Management highlighted that the ongoing transition from DDR4 to DDR5 in AI servers and data centers has created supply constraints and price hikes in DDR4. It is working with customers from this segment by offering last-time-buy programs, which will support their required life cycles or redesign with the latest technologies.
On the IP front, over the last two years, Netlist has been aggressively pursuing legal action against Samsung and Micron, having already secured three jury verdicts totaling $866 million in damages for willful infringement of patents. In July 2025, NLST initiated a new patent infringement lawsuit against Samsung, Micron, and their distributor Avnet. This new lawsuit alleges that Samsung’s and Micron’s DDR5 DIMM memory products infringe on NLST’s U.S. Patent No. 12,373,366 (the “‘366 Patent”).
The Zacks Consensus Estimate for 2025 bottom line for the company stands at a loss of 7 cents, unchanged in the past 60 days. The stock has declined 29.2% in the past year.
Price and Consensus: NLST
Pure Storage: PSTG is witnessing strong demand from large enterprises, ongoing momentum in FlashBlade, particularly FlashBlade//E, and accelerating adoption of its core software and services offerings, including Evergreen//One, Cloud Block Store and Portworx.
Accelerating recurring revenues & subscriptions is another catalyst. In the last reported quarter, Subscription services revenues (48.2% of total revenues) of $414.7 million rose 14.8%. Subscription annual recurring revenues or ARR amounted to nearly $1.8 billion, up 18% on a year-over-year basis.
During the fiscal second quarter of 2026, PSTG expanded its Flash portfolio with a suite of next-gen storage systems, designed for performance, scale and versatility. These are FlashArray//XL R5, FlashArray//ST and FlashBlade//EXA designed to address high-performance and scalable workloads. A key highlight of the fiscal second quarter was the introduction of the Enterprise Data Cloud (“EDC”), a new architectural paradigm for data and storage management. Enhanced with Fusion v2, Purity enables customers to build their own EDC, automating storage and delivering software-defined data management.
Pure Storage’s strategic tie-up with Meta Platforms has moved to first volume deployment, with revenues being recognized in the fiscal second quarter. PSTG also highlighted that other hyperscalers are also evaluating DirectFlash to replace HDD/SSD, given significant gains in performance and cooling efficiency. Management reiterated that it remains confident of deploying 1-2 exabytes of DirectFlash technology by fiscal 2026 and “possibly more.”
Global macro uncertainty and stiff competition remain concerns. If macro uncertainty intensifies, enterprises may delay cloud migrations, containerization or AI-related storage projects, creating a downside to PSTG’s revenue growth.
Currently, PSTG carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $1.96 per share, unchanged in the past seven days. The stock has gained 71.6% in the past year.
Price and Consensus: PSTG
NetApp: Strength in the flash business, Public Cloud segment and emerging opportunities in cloud/AI bode well for NetApp.
NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, including the C-series capacity flash and ASA block-optimized flash. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market. Management highlighted that at the end of the first quarter of fiscal 2026, 45% of systems in its installed base under active support contracts are all-flash. All-Flash Array Business’ annualized net revenue run rate was $3.6 billion, up 6% year over year. Total billings rose 4% year over year to $1.5 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 80% year over year in the fiscal first quarter. This led to an 18% jump in Professional Services revenues to $97 million. With $415 million in unbilled RPO (indicator for Keystone performance), up 40% year over year, the pipeline for Keystone remains robust.
Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. First-party and marketplace cloud storage services grew 33% in the fiscal first quarter.
Apart from the demand for flash and block, the increasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal first quarter, the company won more than 125 AI and data lake modernization deals. The company expanded its AI ecosystem and launched a new AIPod Mini with Intel. This solution tackles the cost and complexity challenges of implementing AI at the department and team levels. It also completed the NetApp reference architecture for NVIDIA Cloud Partners.
Management continues to expect spending caution amid an uncertain global macroeconomic outlook. Softness in the U.S. Public Sector and the EMEA weighed on the fiscal first-quarter results, with revenues increasing just 1% year over year. Fiscal 2026 revenues are forecasted to be in the range of $6.625-$6.875 billion.
Currently, NTAP carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2026 earnings is pinned at $7.75 per share, unchanged in the past seven days. The stock has gained 3.4% in the past year.
Price and Consensus: NTAP
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3 Storage Devices Stocks to Focus on Amid Industry Headwinds
Escalating trade tensions, especially with China, and their impact on global supply chains, along with global macroeconomic turbulence and associated inflation, remain headwinds for the Zacks Computer-Storage Devices industry players. Intense competition is another concern for these companies. Nonetheless, accelerating digital transformation, edge computing, proliferation of AI workloads and enterprise cloud adoption are tailwinds that will support growth for the industry in the long run. As hyperscalers double down on AI clusters, companies like Western Digital are benefiting from orders for high-capacity hard disk drives (HDDs) and enterprise solid-state drives (SSDs).
As cyberattacks continue to increase in frequency, the demand for end-to-end encryption will also drive growth in secure storage solutions. These factors propel the demand for sophisticated data storage solutions, bolstering computer storage product requirements. These factors are favorable for prominent industry players like Pure Storage, Inc (PSTG - Free Report) , NetApp, Inc. (NTAP - Free Report) and Netlist Inc. (NLST - Free Report) .
Industry Description
The Zacks Computer-Storage Devices industry houses companies that design, develop, manufacture and market various HDDs and SSDs. These drives are utilized in PCs, laptops, mobiles, servers, network-attached storage devices, video game consoles, digital video recorders and other consumer electronic devices. Some industry participants, including Pure Storage, provide software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Many industry players offer high-performance modular memory subsystems, mount and blade server systems, enterprise storage and data management software, and hardware products and services. Some industry participants also provide purpose-built servers for storing and accessing data over a shared network or the Internet.
4 Trends Shaping the Computer-Storage Industry's Future
AI’s Impact on the Storage Devices Industry: Rapid proliferation of AI is overhauling the entire tech landscape. AI workloads like training large language models and running inference are driving demand for high-speed, high-capacity and low-latency storage solutions. Traditional storage architectures are insufficient for the data throughput required by AI applications, prompting a transition toward NVMe-based SSDs (PCIe Gen 4/5/6), software-defined storage and storage class memory. Object storage is best suited for storing unstructured data, a common prerequisite for AI workloads. Other fast-emerging solutions include Parallel File Systems Optimized for AI and QLC NAND SSDs for AI Data Lakes.
Innovation in Cloud Storage Technologies to Drive Adoption: Broader storage options from collocated hardware (such as hard disks and tape drives) to many cloud storage solutions have put the industry on a growth trajectory. Industry players are well-poised for growth owing to a rapid increase in data, the complexity of data formats and the need to scale resources at regular intervals. These companies rely on AI for IT Operations (AIOps) and machine learning to manage and optimize storage solutions. To streamline data storage, companies are focusing on virtualization technologies. As more data is added from IoT, companies are turning to edge computing architecture to reduce latency and boost flexibility. Kubernetes storage is becoming increasingly popular as it facilitates greater agility and scalability. This has bolstered the deployment of high-capacity mass storage products, which is a positive for industry players. Moreover, the industry’s focus is shifting from one-time hardware sales to recurring, usage-based revenue streams as cloud-native storage models (object storage and Storage-as-a-Service) gain traction.
Macro Conditions Remain Concerns: Escalating trade tensions and tariffs are emerging as a key concern. These are weighing heavily on global macroeconomic conditions and can disrupt supply-chain dynamics. Uncertainty in the macro backdrop and inflationary pressure could affect spending across small and medium-sized businesses globally. The uncertainty in business visibility could dent the industry’s performance in the near term. According to a report from Gartner, worldwide IT spending is now projected to reach $5.43 trillion in 2025, calling for an increase of 7.9% from the 2024 levels. This is below its January forecast of 9.8% growth. The research firm added that spending on software and services will slow down due to global uncertainty, but AI-related infrastructure spending like data center systems will continue to increase. The Devices segment is expected to grow 5.4% in 2025.
Uncertainty Around PC Shipments: Worldwide PC shipments were up 4.4% year over year in the second quarter of 2025, per a Gartner report. The research firm noted that demand increased due to Windows 11 migrations and pandemic-era desktop renewals. However, Gartner highlighted that shipments could plateau in the second half of 2025. This will mainly stem from vendors' lowered stock in response to demand, leaving excess inventory by year-end.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Computer Storage is housed within the broader Zacks Computer and Technology Sector. It carries a Zacks Industry Rank #189, which places it in the bottom 23% of more than 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, considering bright prospects, let us look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 but Lags Sector
The Zacks Computer-Storage Devices industry has outpaced the S&P 500 composite but lags the broader sector in the past year.
The industry has risen 22.7% in this period compared with the S&P 500’s gain of 17.8%. The broader sector has gained 28.3% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month P/E (or Price/Earnings), which is a commonly used multiple for valuing computer storage device companies, we see that the industry is currently trading at 21.15X compared with the S&P 500’s 23.32X.This is below the sector’s forward 12-month P/E of 28.93X.
In the past five years, the industry has traded as high as 194.54X and as low as 10.32X, with the median being 18.04X, as the charts below indicate.
Forward 12-Month Price-to-Earnings (P/E) Ratio
Forward 12-Month P/E Ratio
3 Computer-Storage Devices to Add to Watchlist
Netlist: Irvine, CA-based Netlist is a leading designer and manufacturer of high-performance SSDs and modular memory subsystems for enterprise customers in various industries.
In the last reported quarter, NLST’s revenues jumped 44% sequentially and 13% year over year to $41.7 million, driven by growing demand for DDR5 and continued strength in custom DDR4 modules. Management highlighted that the ongoing transition from DDR4 to DDR5 in AI servers and data centers has created supply constraints and price hikes in DDR4. It is working with customers from this segment by offering last-time-buy programs, which will support their required life cycles or redesign with the latest technologies.
On the IP front, over the last two years, Netlist has been aggressively pursuing legal action against Samsung and Micron, having already secured three jury verdicts totaling $866 million in damages for willful infringement of patents. In July 2025, NLST initiated a new patent infringement lawsuit against Samsung, Micron, and their distributor Avnet. This new lawsuit alleges that Samsung’s and Micron’s DDR5 DIMM memory products infringe on NLST’s U.S. Patent No. 12,373,366 (the “‘366 Patent”).
At present, NLST carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2025 bottom line for the company stands at a loss of 7 cents, unchanged in the past 60 days. The stock has declined 29.2% in the past year.
Price and Consensus: NLST
Accelerating recurring revenues & subscriptions is another catalyst. In the last reported quarter, Subscription services revenues (48.2% of total revenues) of $414.7 million rose 14.8%. Subscription annual recurring revenues or ARR amounted to nearly $1.8 billion, up 18% on a year-over-year basis.
During the fiscal second quarter of 2026, PSTG expanded its Flash portfolio with a suite of next-gen storage systems, designed for performance, scale and versatility. These are FlashArray//XL R5, FlashArray//ST and FlashBlade//EXA designed to address high-performance and scalable workloads. A key highlight of the fiscal second quarter was the introduction of the Enterprise Data Cloud (“EDC”), a new architectural paradigm for data and storage management. Enhanced with Fusion v2, Purity enables customers to build their own EDC, automating storage and delivering software-defined data management.
Pure Storage’s strategic tie-up with Meta Platforms has moved to first volume deployment, with revenues being recognized in the fiscal second quarter. PSTG also highlighted that other hyperscalers are also evaluating DirectFlash to replace HDD/SSD, given significant gains in performance and cooling efficiency. Management reiterated that it remains confident of deploying 1-2 exabytes of DirectFlash technology by fiscal 2026 and “possibly more.”
Global macro uncertainty and stiff competition remain concerns. If macro uncertainty intensifies, enterprises may delay cloud migrations, containerization or AI-related storage projects, creating a downside to PSTG’s revenue growth.
Currently, PSTG carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $1.96 per share, unchanged in the past seven days. The stock has gained 71.6% in the past year.
Price and Consensus: PSTG
NetApp is witnessing higher demand from customers for its portfolio of modern all-flash arrays, including the C-series capacity flash and ASA block-optimized flash. The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market. Management highlighted that at the end of the first quarter of fiscal 2026, 45% of systems in its installed base under active support contracts are all-flash. All-Flash Array Business’ annualized net revenue run rate was $3.6 billion, up 6% year over year. Total billings rose 4% year over year to $1.5 billion.
NetApp’s Keystone storage-as-a-service offering has been gaining significant traction. Keystone revenues grew 80% year over year in the fiscal first quarter. This led to an 18% jump in Professional Services revenues to $97 million. With $415 million in unbilled RPO (indicator for Keystone performance), up 40% year over year, the pipeline for Keystone remains robust.
Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. First-party and marketplace cloud storage services grew 33% in the fiscal first quarter.
Apart from the demand for flash and block, the increasing demand for NetApp’s cloud storage and AI solutions bodes well. In the fiscal first quarter, the company won more than 125 AI and data lake modernization deals. The company expanded its AI ecosystem and launched a new AIPod Mini with Intel. This solution tackles the cost and complexity challenges of implementing AI at the department and team levels. It also completed the NetApp reference architecture for NVIDIA Cloud Partners.
Management continues to expect spending caution amid an uncertain global macroeconomic outlook. Softness in the U.S. Public Sector and the EMEA weighed on the fiscal first-quarter results, with revenues increasing just 1% year over year. Fiscal 2026 revenues are forecasted to be in the range of $6.625-$6.875 billion.
Currently, NTAP carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2026 earnings is pinned at $7.75 per share, unchanged in the past seven days. The stock has gained 3.4% in the past year.
Price and Consensus: NTAP