Key Takeaways
- Google’s TurboQuant algorithm announcement last week sparked widespread selling in memory and storage equities
- Bernstein analysts argue TurboQuant poses no threat to HDD demand and minimal risk to NAND storage
- Western Digital received an upgrade to Outperform with price target increased from $170 to $340
- Seagate maintains Outperform rating with target lifted from $500 to $620; Sandisk holds at $1,000 target
- The three storage companies have declined 17%-26% from recent peak levels
On March 24, 2026, Google unveiled its TurboQuant algorithm, triggering an immediate and pronounced selloff throughout the memory and storage sector.
Western Digital experienced a 21% decline from its recent peak levels. Seagate retreated 17%. Sandisk suffered the most significant drawdown at 26%. The bulk of these declines materialized in the trading sessions immediately after the TurboQuant reveal.
TurboQuant represents an inference optimization technology designed to enhance AI workload efficiency. The algorithm achieves a sixfold reduction in KV cache memory consumption while delivering up to 8x superior inference throughput on Nvidia H100 GPUs without sacrificing accuracy.
Crucially, the algorithm operates exclusively during the inference phase, not during AI model training cycles. It does not affect model weight compression, training datasets, or any information stored in persistent storage.
Bernstein Société Générale Group analysts believe the market’s response was disproportionate to the actual implications. In a research note released Tuesday, they contend the selloff has generated an attractive entry point for investors in all three storage companies.
Bernstein’s Case for Hard Disk Drive Resilience
Mark Newman and his team at Bernstein emphasized that TurboQuant’s effects are confined to GPU high-bandwidth memory and system DRAM. The technology has only an indirect and limited influence on NAND flash, which serves primarily for offloading inactive cache data.
“There is zero impact to HDD demand,” the research team stated. They further noted that any NAND-related effects are marginal and fail to alter the fundamental long-term trajectory for the storage industry.
Bernstein elevated Western Digital from Market Perform to Outperform status. The investment firm increased its price objective from $170 to $340. At the time of the upgrade announcement, Western Digital shares traded at $251.67, representing a 16% decline over the preceding seven-day period.
Western Digital currently displays a PEG ratio of 0.12, which Bernstein interprets as evidence of substantial growth prospects relative to current market valuation. Seventeen Wall Street analysts have recently increased their earnings forecasts for the company.
Seagate retained its Outperform designation. Bernstein elevated its price objective from $500 to $620. The company’s second quarter fiscal 2026 results showed non-GAAP earnings per share of $3.11, surpassing analyst consensus. Gross margin performance reached 42.2%.
Corporate Actions at Sandisk and Western Digital
Seagate’s third quarter outlook projects revenue of $2.90 billion with earnings per share of $3.40.
Sandisk maintained its Outperform rating alongside the $1,000 price target from Bernstein analysts. Western Digital recently disclosed plans to divest up to 7.5 million Sandisk shares through a registered offering, although Sandisk will not receive any financial proceeds from the transaction.
Western Digital additionally executed an exchange involving 5.8 million Sandisk shares, valued at $545 per share, to retire existing debt obligations. This transaction formed part of a comprehensive liability reduction strategy. In response to this deleveraging initiative, S&P Global Ratings elevated Western Digital’s credit standing to BBB- with a stable outlook assessment.
The storage manufacturer also completed the full redemption of its outstanding 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 boosted its target to $369, citing robust demand dynamics for AI-optimized storage solutions.
Bernstein’s current projections anticipate the combined revenue base of Western Digital and Seagate will expand at a 24% compound annual growth rate spanning fiscal years 2025 through 2030.
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