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Western Digital and Seagate Surge as AI Infrastructure Demand Fuels Record Gains

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Shares of data storage leaders Western Digital and Seagate have skyrocketed this year, outpacing the broader market as global demand for AI-driven infrastructure fuels unprecedented growth in hard drive sales. Both companies’ stocks have surged over 200% in 2025, reaching record highs amid a worldwide scramble to expand data storage capacity for artificial intelligence applications.

Western Digital shares rose more than 11% on Friday after the company forecast second-quarter earnings above Wall Street estimates. Analysts at J.P. Morgan noted that Western Digital has secured purchase orders from five of its largest customers through 2026, signaling strong confidence in sustained AI-related demand.

Seagate, a close rival, also projected revenue and profit above expectations earlier this week, pushing its stock up more than 22%. Both companies are now among the top three performers in the S&P 500 this year, trailing only Robinhood.

Smaller competitor Sandisk, spun off from Western Digital in February, has seen its shares soar fivefold since its debut and was up another 3.6% on Friday ahead of its upcoming earnings report.

The S&P 1500 tech hardware, storage, and peripherals sector—which includes all three companies—has climbed more than 12% this year, hitting an all-time high. As major tech firms like Alphabet, Microsoft, Meta, and Amazon ramp up capital spending on chips and data centers, analysts expect global AI infrastructure investments to reach up to $4 trillion by 2030.

Nvidia briefly hits $4 trillion market value, cementing AI leadership

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Nvidia (NVDA.O) briefly reached a market capitalization of $4 trillion on Wednesday, becoming the first company ever to hit this milestone and reaffirming its dominance in the artificial intelligence (AI) sector. Shares surged as much as 2.8% to an all-time high of $164.42 before closing up 1.8%, giving Nvidia a market value of approximately $3.97 trillion.

This milestone reflects Wall Street’s strong confidence in Nvidia’s leading role in powering AI innovation, with its high-performance chips crucial to advancements in the technology. Robert Pavlik, senior portfolio manager at Dakota Wealth, remarked that the rally “highlights the fact that companies are shifting their asset spend in the direction of AI,” which he sees as the future of technology.

Nvidia’s stock has seen a remarkable recovery after a slow start in 2025, which was rattled by competition from Chinese AI models like DeepSeek. The company reached a $1 trillion valuation in June 2023 and has since nearly quadrupled in value within about a year—outpacing other tech giants like Apple and Microsoft, the only other U.S. firms with market caps above $3 trillion.

Microsoft, the second most valuable U.S. company, closed Wednesday at $503.51 per share with a $3.74 trillion market cap. Nvidia’s rally has lifted it by approximately 74% from its April lows, coinciding with renewed optimism about U.S. trade relations.

Currently, Nvidia represents 7.3% of the S&P 500 index, slightly more than Apple’s 7% and Microsoft’s 6%. Its valuation now surpasses the combined stock market value of Canada and Mexico, as well as all publicly listed companies in the UK.

Despite its high valuation, Nvidia’s 12-month forward price-to-earnings ratio stands at 32, below its three-year average of 37.

While Nvidia’s GPUs dominate AI workloads, rivals such as Advanced Micro Devices (AMD) and others are seeking to chip away at its market share by offering more affordable alternatives. Meanwhile, major customers like Amazon, Microsoft, and Alphabet face investor pressure to moderate their AI spending.

Nvidia posted $44.1 billion in revenue for the first quarter of 2025, a 69% increase year-on-year. For the second quarter, the company projects revenue around $45 billion, plus or minus 2%, with earnings due on August 27.

Year-to-date, Nvidia’s stock is up about 22%, outperforming the Philadelphia Semiconductor Index’s roughly 15% gain.

DeepSeek’s Chatbot Scores Low in NewsGuard Audit, Trails Western Rivals

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DeepSeek, a Chinese AI startup, saw its chatbot underperform in a recent NewsGuard audit, achieving just 17% accuracy in delivering accurate news and information. The audit compared DeepSeek’s chatbot with Western AI models, including OpenAI’s ChatGPT and Google’s Gemini, ranking it tenth out of eleven. DeepSeek’s chatbot was found to repeat false claims 30% of the time and provide vague or unhelpful answers 53% of the time in response to news-related queries, leading to an overall fail rate of 83%. In contrast, Western competitors had an average fail rate of 62%.

This performance raises questions about the quality of DeepSeek’s AI technology, which the company has touted as being on par with or superior to OpenAI’s models, at a fraction of the cost. Despite its low accuracy score, DeepSeek’s chatbot quickly became the most downloaded app on Apple’s App Store, igniting concerns about the United States’ dominance in AI and contributing to a market downturn that resulted in a $1 trillion loss in U.S. tech stocks.

NewsGuard used 300 identical prompts to assess DeepSeek and its Western counterparts, including 30 based on false claims circulating online. The topics of these prompts included incidents like the killing of UnitedHealthcare executive Brian Thompson and the downing of Azerbaijan Airlines flight 8243. DeepSeek’s chatbot also reiterated the Chinese government’s stance on certain issues, even when those topics were unrelated to China, such as in the case of the Azerbaijan Airlines crash.

Despite its poor accuracy, some analysts suggest the significance of DeepSeek’s breakthrough lies in its affordability, with D.A. Davidson’s Gil Luria pointing out that it can answer questions at 1/30th the cost of comparable models. However, as with other AI models, DeepSeek was found to be particularly susceptible to repeating false claims, especially when used to create or spread misinformation.