Memory and Storage Stocks Decline Following Google Algorithm Announcement
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy STX?
Source: seekingalpha
- Market Reaction Analysis: Following Google's announcement of the TurboQuant algorithm on March 24, memory and storage stocks have seen significant declines, with Western Digital, Seagate, and Sandisk dropping 21%, 17%, and 26% respectively, reflecting market concerns over the new technology.
- Analyst Rating Adjustments: Bernstein upgraded Western Digital from Market Perform to Outperform, raising its target price from $170 to $340, while maintaining Seagate's Outperform rating and increasing its target price from $500 to $620, indicating a positive outlook for the industry.
- Demand and Price Expectations: Analysts expect the combined revenue of Western Digital and Seagate to grow at a 24% CAGR from FY25 to FY30, driven by 24% bits growth and stable average selling prices, suggesting robust market demand.
- Technology Impact Assessment: Although the TurboQuant algorithm achieved a six-fold reduction in KV cache memory and eight-fold inference performance gains on Nvidia H100 GPUs, Bernstein analysts noted that it has no impact on HDD demand, primarily affecting GPU HBM or system DRAM, indicating stable demand for HDDs.
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Analyst Views on STX
Wall Street analysts forecast STX stock price to fall
18 Analyst Rating
14 Buy
3 Hold
1 Sell
Moderate Buy
Current: 391.760
Low
150.00
Averages
310.39
High
465.00
Current: 391.760
Low
150.00
Averages
310.39
High
465.00
About STX
Seagate Technology Holdings plc provides mass-data storage infrastructure solution. The Company’s principal products are hard disk drives, commonly referred to as disk drives, hard drives (HDDs). In addition to HDDs, the Company produces a range of data storage products, including solid state drives (SSDs), solid state hybrid drives, storage subsystems, as well as a scalable edge-to-cloud mass data platform. Its HDD products are designed for mass capacity storage and legacy markets. Mass capacity storage involves use cases, such as hyperscale data centers and public clouds, as well as emerging use cases. The Company’s HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express based designs to support a variety of mass capacity and legacy applications. Its systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Recovery Signals: Despite a rare down month for STX and WDC, Wall Street analysts remain optimistic about the HDD market outlook, anticipating a gradual recovery in demand over the coming months that could enhance the performance of these companies.
- Demand Growth Expectations: Analysts highlight that the ongoing expansion of data centers and cloud computing services is likely to restore HDD demand growth in 2024, presenting new revenue opportunities for companies like STX and WDC.
- Competitive Landscape Changes: Analysts believe that market competition will drive STX and WDC to intensify their focus on technological innovation and product upgrades to meet evolving customer needs, thereby improving market share and profitability.
- Investor Confidence Boost: The positive commentary from analysts is likely to bolster investor confidence in the HDD market, potentially attracting more capital into related stocks and further driving up share prices.
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- Market Reaction Analysis: Following Google's announcement of the TurboQuant algorithm on March 24, memory and storage stocks have seen significant declines, with Western Digital, Seagate, and Sandisk dropping 21%, 17%, and 26% respectively, reflecting market concerns over the new technology.
- Analyst Rating Adjustments: Bernstein upgraded Western Digital from Market Perform to Outperform, raising its target price from $170 to $340, while maintaining Seagate's Outperform rating and increasing its target price from $500 to $620, indicating a positive outlook for the industry.
- Demand and Price Expectations: Analysts expect the combined revenue of Western Digital and Seagate to grow at a 24% CAGR from FY25 to FY30, driven by 24% bits growth and stable average selling prices, suggesting robust market demand.
- Technology Impact Assessment: Although the TurboQuant algorithm achieved a six-fold reduction in KV cache memory and eight-fold inference performance gains on Nvidia H100 GPUs, Bernstein analysts noted that it has no impact on HDD demand, primarily affecting GPU HBM or system DRAM, indicating stable demand for HDDs.
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- Market Recovery Signals: Despite a rare down month for STX and WDC, Wall Street analysts remain optimistic about the HDD market outlook, anticipating a gradual recovery in demand over the coming months that could enhance the performance of these companies.
- Demand Growth Expectations: Analysts highlight that the ongoing expansion of data centers and cloud computing services is likely to restore HDD demand growth in 2024, presenting new revenue opportunities for companies like STX and WDC.
- Competitive Landscape Changes: Analysts believe that market competition will drive STX and WDC to intensify their focus on technological innovation and product upgrades to meet evolving customer needs, thereby improving market share and profitability.
- Investor Confidence Boost: The positive commentary from analysts is likely to bolster investor confidence in the HDD market, potentially attracting more capital into related stocks and further driving up share prices.
See More
Nike Shares Drop 10% Despite Beating Earnings Expectations
- Nike's Revenue Decline: Nike's North American revenue of $5.03 billion fell short of the $5.04 billion expected by analysts, leading to a 10% drop in stock price; however, the company reported fiscal third-quarter earnings of 35 cents per share and $11.28 billion in revenue, exceeding expectations of 28 cents and $11.24 billion, showcasing resilience amid challenges.
- Dave & Buster's Positive Outlook: Dave & Buster's shares rose 7% as management anticipates increases in same-store sales, revenue, and adjusted EBITDA in 2026, despite posting a fourth-quarter adjusted loss of 35 cents per share and revenue of $529.6 million, below the expected profit of 39 cents and revenue of $555.9 million, indicating future growth potential.
- PVH Strong Performance: PVH's stock increased by 1% after reporting fourth-quarter adjusted earnings of $3.82 per share and revenue of $2.51 billion, both surpassing analyst expectations of $3.31 per share and $2.43 billion, reflecting successful brand management.
- NCino Stock Surge: NCino shares surged 22% after providing first-quarter revenue guidance of $154.5 million to $156.4 million, exceeding the $152.7 million consensus, with fourth-quarter revenue also surpassing expectations at $149.7 million, indicating strong performance in the cloud software market.
See More
US Stocks Surge on Hopes for End to Iran War
- Market Rally: The S&P 500 index rose by 2.91%, the Dow Jones Industrial Average by 2.49%, and the Nasdaq 100 by 3.43%, reflecting market optimism regarding the potential end of the Iran war, which could lower energy prices and ease inflation concerns.
- Consumer Confidence Boost: The US March consumer confidence index unexpectedly increased by 0.8 to 91.8, surpassing the anticipated decline to 87.9, indicating a strengthening consumer outlook that may drive spending and economic growth.
- Strength in China: China's March manufacturing PMI rose to 50.4, better than the expected 50.1, signaling signs of economic recovery that could positively impact global growth prospects and further support US stock performance.
- Falling Bond Yields: The 10-year Treasury note yield dropped to 4.28%, a one-week low, reflecting reduced inflation worries, which may provide support for the stock market and enhance investor interest in equities.
See More
US Stocks Surge as Market Sentiment Improves
- Market Sentiment Improves: The S&P 500 index rose by 1.02%, the Dow Jones Industrial Average increased by 0.67%, and the Nasdaq 100 surged by 1.10% as President Trump signaled a willingness to end military actions against Iran, reflecting investor optimism over easing geopolitical risks.
- Falling Bond Yields: The 10-year Treasury note yield dropped to a one-week low of 4.30%, indicating market expectations that an end to the Iran conflict could lower energy prices and alleviate inflation concerns, further supporting stock market gains.
- Consumer Confidence Rises: The US March consumer confidence index unexpectedly increased by 0.8 to 91.8, surpassing expectations of a decline to 87.9, suggesting enhanced consumer confidence in economic prospects, which could drive spending and economic growth.
- Strong Chinese Economy: China's March manufacturing PMI rose to 50.4, exceeding expectations of 50.1, indicating signs of economic recovery that support global growth prospects and positively influence market performance.
See More
US Stocks Surge as Market Sentiment Improves
- Market Rebound: The S&P 500 Index rose by 1.33%, the Dow Jones Industrial Average increased by 1.10%, and the Nasdaq 100 Index climbed by 1.45%, reflecting investor optimism following President Trump's willingness to end military actions against Iran, potentially easing geopolitical tensions.
- Supportive Economic Data: China's March manufacturing PMI rose by 1.4 to 50.4, surpassing expectations of 50.1, indicating signs of economic recovery that could enhance global growth prospects and drive stock markets higher.
- Falling Bond Yields: The 10-year T-note yield dropped to 4.30%, a one-week low, as WTI crude oil prices fell, alleviating inflation concerns and lowering borrowing costs, thereby supporting further gains in the stock market.
- Tech Stocks Lead Gains: The
See More
Memory and Storage Stocks Decline Following Google Algorithm Announcement
- Market Reaction Analysis: Following Google's announcement of the TurboQuant algorithm on March 24, memory and storage stocks have seen significant declines, with Western Digital, Seagate, and Sandisk dropping 21%, 17%, and 26% respectively, reflecting market concerns over the new technology.
- Analyst Rating Adjustments: Bernstein upgraded Western Digital from Market Perform to Outperform, raising its target price from $170 to $340, while maintaining Seagate's Outperform rating and increasing its target price from $500 to $620, indicating a positive outlook for the industry.
- Demand and Price Expectations: Analysts expect the combined revenue of Western Digital and Seagate to grow at a 24% CAGR from FY25 to FY30, driven by 24% bits growth and stable average selling prices, suggesting robust market demand.
- Technology Impact Assessment: Although the TurboQuant algorithm achieved a six-fold reduction in KV cache memory and eight-fold inference performance gains on Nvidia H100 GPUs, Bernstein analysts noted that it has no impact on HDD demand, primarily affecting GPU HBM or system DRAM, indicating stable demand for HDDs.
See More
