Key Takeaways
- Memory and storage equities experienced significant declines following Google’s TurboQuant algorithm unveiling last week
- Analysts at Bernstein conclude TurboQuant affects GPU memory primarily, with negligible HDD impact and limited NAND effects
- The firm upgraded Western Digital to Outperform, doubling its price target from $170 to $340
- Seagate received a target increase to $620 from $500; Sandisk maintained its $1,000 target
- Recent declines range from 17% to 26% across these three storage companies
When Google unveiled TurboQuant on March 24, 2026, the storage sector faced immediate selling pressure. Market participants dumped shares across the memory and storage landscape.
Western Digital shares declined 21% from their peak. Seagate experienced a 17% retreat. Sandisk faced the most severe drawdown at 26%. The bulk of these losses materialized in trading sessions immediately after TurboQuant’s public disclosure.
Google developed TurboQuant as an inference optimization tool. The algorithm reduces KV cache memory requirements by a factor of six while boosting inference speeds up to eight times on Nvidia H100 GPUs. These performance gains come without sacrificing accuracy.
The technology operates exclusively during the inference phase of AI operations. Model weights, training datasets, and stored data remain untouched by the compression technique.
Bernstein Société Générale Group analysts view the market’s response as excessive. Their Tuesday research note positions the recent weakness as an attractive entry opportunity for investors across all three companies.
Hard Disk Drives Remain Unaffected, Bernstein Argues
Mark Newman and his team at Bernstein outlined why TurboQuant’s influence remains confined to specific memory categories. The algorithm primarily affects GPU high-bandwidth memory along with system DRAM. NAND flash experiences minimal indirect effects through its role in cold cache offloading.
“There is zero impact to HDD demand,” the research team stated. They emphasized that NAND repercussions are modest and fail to alter fundamental storage sector trajectories.
The firm elevated Western Digital from Market Perform to Outperform status. Their new price objective of $340 represents a 100% increase from the prior $170 level. Shares traded at $251.67 when the upgrade was published, marking a 16% weekly decline.
Analysts highlighted Western Digital’s 0.12 PEG ratio as evidence of attractive valuation relative to growth prospects. Seventeen separate analysts have recently increased their profit forecasts for the company.
Bernstein maintained Seagate’s Outperform designation while boosting the price objective from $500 to $620. The company’s Q2 FY2026 results showed non-GAAP earnings of $3.11 per share, surpassing Wall Street consensus. Gross profit margins reached 42.2%.
Recent Corporate Actions at Sandisk and Western Digital
Seagate’s Q3 outlook projects $2.90 billion in revenue with earnings of $3.40 per share.
Bernstein kept Sandisk at Outperform with a $1,000 price target unchanged. Western Digital recently registered up to 7.5 million Sandisk shares for potential sale, though Sandisk itself will receive no capital from these transactions.
The company also executed a debt-for-equity exchange involving 5.8 million Sandisk shares valued at $545 each. This strategic move forms part of Western Digital’s broader liability reduction initiative. S&P Global Ratings responded by elevating Western Digital’s credit rating to BBB- with a stable outlook.
Western Digital completed full redemption of its 4.75% Senior Notes scheduled to mature in 2026.
Cantor Fitzgerald established a $420 price target on Western Digital with an Overweight rating following the company’s Innovation Day presentation. Morgan Stanley moved its target to $369, citing robust AI storage infrastructure demand.
Bernstein’s updated financial model forecasts combined revenue from Western Digital and Seagate will expand at a 24% compound annual rate between FY2025 and FY2030.
