SanDisk and Seagate Named Bernstein Top Picks as AI Data Booms

TLDR

• Bernstein says the AI-driven data explosion will continue through 2026 with no signs of slowing down
• Memory and storage suppliers like SanDisk and Seagate are the biggest winners, with SanDisk getting a $580 price target
• Hardware makers including HP Inc., SMCI, Dell, and HPE face earnings pressure from rising component costs, with potential 19% downside
• Broadcom maintains its leadership position in AI ASIC space despite competition concerns, with Bernstein setting a $475 price target
• IBM could see 23% upside from early quantum computing use cases in 2026

Bernstein released its 2026 U.S. IT hardware outlook this week. The firm says the AI-driven data explosion shows no signs of stopping.

Analyst Mark Newman wrote that model developers have no reason to reduce investment as AI capabilities continue to improve. The data requirements for AI models keep growing.

The demand comes from multiple sources. AI training workloads require massive amounts of data storage. Content creation produces richer files that take up more space. Companies also keep data longer than before.

This demand has pushed prices higher. Bernstein says buyers are “price insensitive” because they need the storage capacity regardless of cost.

Storage Companies Get Top Ratings

SanDisk received Bernstein’s highest praise for 2026. The firm raised its price target for SanDisk to $580. The reasoning centers on NAND shortages and price increases that Bernstein calls unprecedented.

Sandisk Corporation, SNDK

Seagate also earned a top pick designation. Bernstein views Seagate as “a less volatile beneficiary of the data explosion” compared to other storage companies.

IBM could gain from quantum computing momentum. Bernstein estimates 23% upside for IBM tied to early quantum computing applications.

Broadcom faces competition questions but Bernstein says these concerns are overblown. Analyst Stacy Rasgon maintained an Outperform rating with a $475 price target on January 9.

The firm met with Broadcom leadership. They discussed worries about rising AI competition and customer-owned tooling.

Bernstein came away convinced these threats are exaggerated. The firm says Broadcom has technological advantages that competitors and customers cannot match.

These advantages include 3D chip stacking and 400G serdes technology. Broadcom also controls its own substrate manufacturing. The company even works on techniques that might eliminate the need for interposers.

Bernstein noted that Broadcom benefits from Nvidia’s innovation pace. Broadcom enables XPU customers to keep up with Nvidia’s roadmap. This makes Broadcom the only company that can provide this capability.

Hardware Makers Face Pressure

The rising storage and memory prices create problems for hardware manufacturers. OEMs face the biggest challenges according to Bernstein.

HP Inc. and SMCI could see earnings drop by as much as 19%. Dell and HPE also face downward pressure on their results.

Apple has protection in the short term through long-term supplier agreements. But the company may need to raise device prices later in 2026. Higher prices could slow unit sales growth.

Bernstein sees the memory and storage price surge continuing through 2026. The firm expects demand to remain strong as AI development accelerates.

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