Bernstein Calls Storage Stock Selloff an Overreaction – Time to Scoop Up Seagate, Western Digital, and Sandisk?

Key Takeaways

• Google’s newly unveiled TurboQuant algorithm sparked a widespread selloff across memory and storage equities
• Bernstein analysts argue TurboQuant poses no threat to HDD demand and minimal risk to NAND markets
• The firm upgraded Western Digital to Outperform status, boosting its price target from $170 to $340
• Seagate received a price target increase from $500 to $620; Sandisk maintained its $1,000 target
• The three storage companies have declined 17% to 26% from their recent peaks

When Google unveiled its TurboQuant algorithm on March 24, 2026, the announcement triggered an immediate and severe downturn in memory and storage sector stocks.

Western Digital experienced a 21% decline from its recent peak. Seagate tumbled 17%. Sandisk suffered the most dramatic fall, plunging 26%. The bulk of these losses materialized in the immediate aftermath of the TurboQuant disclosure.

Sandisk Corporation, SNDK

TurboQuant represents an inference optimization technology. The algorithm cuts KV cache memory requirements by a factor of six while delivering up to eight times enhanced inference performance on Nvidia H100 GPUs, all without sacrificing accuracy.

The technology operates exclusively during the inference phase, not during AI model training. It doesn’t compress model weights, training datasets, or any stored data at rest.

Bernstein Société Générale Group analysts believe the market’s response was disproportionate to the actual implications. In a research note released Tuesday, they contended the downturn has generated attractive entry points across all three storage companies.

Hard Drive Demand Remains Untouched, Says Bernstein

Led by Mark Newman, Bernstein’s analyst team explained that TurboQuant’s effects are confined to GPU high-bandwidth memory and system DRAM. The technology has only marginal implications for NAND, which serves solely to offload inactive caches.

Bernstein elevated Western Digital from Market Perform to Outperform. The investment firm increased its price objective from $170 to $340. At the time of the rating change, Western Digital traded at $251.67, representing a 16% drop over the preceding week.

Western Digital currently sports a PEG ratio of 0.12, which analysts interpret as indicating substantial growth prospects relative to current valuation levels. Seventeen Wall Street analysts have recently adjusted their earnings projections higher.

Seagate retained its Outperform designation. Bernstein elevated its price objective from $500 to $620. Seagate delivered Q2 FY2026 non-GAAP earnings per share of $3.11, surpassing Wall Street expectations. The company achieved gross margins of 42.2%.

Recent Corporate Actions at Sandisk and Western Digital

Seagate’s third-quarter outlook projects revenue of $2.90 billion and earnings per share of $3.40.

Sandisk maintained both its Outperform rating and $1,000 price target from Bernstein. Western Digital recently submitted regulatory filings to divest up to 7.5 million Sandisk shares, although Sandisk won’t receive any proceeds from the transaction.

Western Digital additionally swapped 5.8 million Sandisk shares, priced at $545 each, to reduce outstanding debt obligations. This transaction formed part of a comprehensive strategy to strengthen the balance sheet. In response to this deleveraging initiative, S&P Global Ratings elevated Western Digital’s credit rating to BBB- with a stable outlook.

The storage company also completed the redemption of all remaining 4.75% Senior Notes scheduled to mature in 2026.

Cantor Fitzgerald increased its Western Digital price target to $420 with an Overweight rating following the company’s Innovation Day presentation. Morgan Stanley raised its target to $369, citing robust demand for AI-focused storage solutions.

Bernstein currently forecasts that Western Digital and Seagate’s combined revenue will expand at a 24% compound annual growth rate spanning FY2025 through FY2030.

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