3 Storage Stocks Poised to Capitalize on the Data Explosion
AI utilizes powerful computers scanning vast amounts of data to draw conclusions or answer human’s questions efficiently. Consequently, data storage companies will benefit tremendously from the proliferation of AI. Data Center Dynamics recently said, “However intangible the cloud might sound, it still needs physical hard drives to store the data for which AI is ravenous…. AI’s dependence on data will mean greater demand for cloud data storage…which means surging demand for hard drives.” Firms specializing in data storage should thrive in the medium- and the long-term. For investors who want to capitalize on these trends, here are three storage stocks poised to capitalize on the data explosion.
Pure Storage (PSTG)
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Data storage provider, Pure Storage (NASDAQ:PSTG), expects its top line to jump 15% YOY to $680 million. Analysts, on average, had predicted that its Q1 revenue would come in at $670 million.
“Pure (Storage) delivered healthy results and offered an encouraging double-digit revenue growth outlook — along with modest margin expansion,” investment bank William Blair wrote in a note to investors.
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Citi recently started coverage of the shares with a “Buy” rating and a $65 price target. According to the bank, PSTG will benefit from its flash memory business. This business will get a boost from the proliferation of AI and machine learning.
Given all of PSTG’s positive attributes, it’s definitely one of the best storage stocks to buy.
Micron (MU)
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Micron (NASDAQ:MU) markets flash memory products. Citi recently predicted that the company would deliver “beat-and-raise” fiscal Q2 results, driven by its product’s high prices and demand. The bank noted that some of Micron’s more expensive products are used in conjunction with Nvidia’s (NASDAQ:NVDA) chips. Of course, the demand for Nvidia’s processors is currently very strong. Citi also added that MU stock deserves a high valuation due to its link to the AI boom, and the bank placed a $150 price target on the shares.
Also noteworthy is that Micron will probably receive subsidies from the Biden administration for its factories, according to The Wall Street Journal.
MU has an attractive forward price-earnings ratio of 13.7 times.
Data Storage (DTST)
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Data Storage (NASDAQ:DTST) provides data vaulting services. These services are defined as “a business continuity and disaster recovery (BCDR) strategy that requires a copy of each data backup to be stored in a place that’s physically isolated from primary backup and production environments.” The data can be stored in the cloud or in a physical location. DTST also provides cybersecurity products.
In Q3, DTST’s top line jumped 35% YOY to $6 million, while its income (loss) from operations came in at $14,000, up from a loss of $223,000 in Q3 of 2022. In the first nine months of last year, its operating activities generated net cash of $2.16 million.
Investor’s Business Daily gives DTST a Composite Rating of 98 out of 99 and an Accumulation/Distribution rating of A, indicating that institutional investors have been buying large amounts of its shares in the last 13 weeks.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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