We’re nearly two years into a bull market driven by AI. We’ve seen big tech companies soar as new AI programs have rolled out. More recently, investors have turned to data centers, and now nuclear energy as ways to benefit from this rollout.
There’s one more component that’s starting to gain attention and traction for the AI boom. It’s a hardware play that’s been overlooked among the massive demand for GPUs and servers.
The play? Hard drive storage. No matter how complicated AI gets, it still needs to be able to store massive amounts of data to function. That’s starting to show up on the bottom line of companies like Western Digital Corporation (WDC).
Western Digital is coming off of a year of losses, but rising demand for hard drives should boost revenues and get the firm back to profitability.
Currently, shares trade at 9 times forward earnings.
Action to take: Shares are already trending higher on the AI boom, and momentum investors may want to join in that trend. Western Digital suspended its dividend in 2020, but could reinstate it after profitability resumes.
For traders, shares are trending higher, but the stock is still well off the highs set earlier in the summer. The January $80 calls, last trading for about $2.00, could see high double-digit returns if shares continue rallying and look to re-test their 52-week highs.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.