Key Takeaways
- Google’s TurboQuant algorithm announcement sparked a major selloff in storage and memory stocks
- Bernstein argues TurboQuant poses no threat to HDD demand and minimal risk to NAND
- Western Digital (WDC) received an upgrade to Outperform with price target increased to $340 from $170
- Seagate (STX) saw its price target jump to $620 from $500 while maintaining Outperform rating
- Sandisk retained its Outperform rating with $1,000 price target unchanged
- The three storage stocks have declined 17% to 26% from their recent peak levels
When Google unveiled its TurboQuant algorithm on March 24, 2026, the announcement triggered a widespread selloff across memory and storage equities.
Western Digital plunged 21% from its recent peak. Seagate declined 17%. Sandisk experienced the most severe downturn, tumbling 26%. The bulk of these declines occurred in the immediate aftermath of the TurboQuant reveal.
TurboQuant represents a breakthrough in inference optimization technology. The algorithm cuts KV cache memory requirements by a factor of six while boosting inference performance up to eight times on Nvidia H100 GPUs, all without sacrificing accuracy.
The technology operates exclusively during the inference phase, not during AI model training processes. 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 excessive. In a Tuesday report, they contended the decline has created attractive entry points across all three storage stocks.
Bernstein Explains Why Hard Drive Demand Remains Intact
The Bernstein analyst team, headed by Mark Newman, explained that TurboQuant’s effects are confined to GPU high-bandwidth memory and system DRAM. NAND sees only indirect impact, primarily when used for offloading cold caches.
“There is zero impact to HDD demand,” the research team stated. They emphasized that NAND consequences are negligible and don’t alter the long-term storage industry trajectory.
Bernstein elevated Western Digital from Market Perform to Outperform status. The firm increased its price objective from $170 to $340. At the time of the rating change, Western Digital traded at $251.67, reflecting a 16% decline over the preceding week.
Western Digital’s PEG ratio of 0.12 suggests compelling growth prospects relative to current valuation, according to analysts. Seventeen Wall Street analysts have recently increased their earnings forecasts for the company.
Seagate maintained its Outperform designation. Bernstein boosted its price objective from $500 to $620. Seagate’s Q2 FY2026 results showed non-GAAP earnings per share of $3.11, surpassing analyst expectations. The company posted gross margins of 42.2%.
Latest Corporate Actions from Sandisk and Western Digital
Seagate’s Q3 outlook projects revenue of $2.90 billion with earnings per share reaching $3.40.
Sandisk maintained its Outperform designation and $1,000 price objective from Bernstein. Western Digital recently registered to divest up to 7.5 million Sandisk shares, with Sandisk not receiving any proceeds from the transaction.
Western Digital also swapped 5.8 million Sandisk shares, priced at $545 each, to retire debt. This transaction formed part of a comprehensive liability reduction initiative. After this exchange, S&P Global Ratings elevated Western Digital’s credit rating to BBB- with a stable outlook.
The firm additionally retired all remaining 4.75% Senior Notes scheduled to mature in 2026.
Cantor Fitzgerald increased its Western Digital price target to $420 with an Overweight stance following the company’s Innovation Day presentation. Morgan Stanley raised its target to $369, highlighting robust AI storage demand drivers.
Bernstein currently projects combined revenue from Western Digital and Seagate will expand at a 24% compound annual growth rate between FY2025 and FY2030.
