Data storage involves systematically archiving digital information to ensure its availability and security for future use. This encompasses various methods, including direct attached storage, network attached storage, and cloud-based solutions. The rise of GenAI has significantly impacted the data storage landscape, necessitating new architectures to handle the growing volume and complexity of data generated. Innovations such as cloud storage, SSD technology, and emerging solutions like DNA data storage are shaping the future of data management.
The next-generation data storage market is projected to grow from $65.1 billion in 2024 to $90 billion by 2029, exhibiting a compound annual growth rate of 6.7%, according to MarketsandMarkets. This is attributed to the increasing demand for energy-efficient and compact storage solutions, the rising adoption of NVMe technology in enterprise systems, and the expanding use of 5G technology. North America held the largest share of the market in 2023, accounting for 43.4%, largely due to heightened demand from sectors such as banking, financial services, insurance (BFSI), and healthcare.
High-speed storage solutions enable organizations to process large datasets quickly, which accelerates model training and enhances analytical effectiveness. Real-time data processing is another critical application of next-generation storage. By integrating AI with advanced storage systems, organizations can perform immediate analysis essential for sectors like finance, where fraud detection and predictive maintenance are paramount. Storage Area Networks (SANs) optimize throughput and minimize latency, making them ideal for mission-critical applications.
AI-driven technologies can detect anomalies and potential threats in real-time, providing essential protection against cyber threats as data breaches become more common. Next-generation storage systems also support the growing Internet of Things (IoT) by efficiently managing the vast amounts of data generated by connected devices. Many of these systems also integrate seamlessly with cloud services, allowing businesses to leverage scalable storage options while utilizing AI for improved performance.
As the market adapts to these opportunities, we are here to help you find the 10 best data storage stocks to buy according to hedge funds.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top data storage stocks. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Data Storage Stocks To Buy According to Hedge Funds
10. Backblaze Inc. (NASDAQ:BLZE)
Number of Hedge Fund Holders: 14
Backblaze Inc. (NASDAQ:BLZE) is a cloud storage provider offering businesses and individuals scalable and cost-effective data storage, protection, and management solutions. Its key services include Backblaze B2 Cloud Storage, an IaaS platform for various use cases, and Backblaze Computer Backup, a subscription-based service for automated data protection.
The company reported 29% year-over-year revenue growth in Q3 2024, recording $32.6 million, with B2 Cloud Storage growing at 39%. B2 Cloud Storage provides affordable, high-performance, and scalable cloud storage for businesses of all sizes. The company prioritizes upskilling its sales team, strengthening key partnerships, and implementing focused sales plays to drive B2 Cloud Storage revenue. It’s witnessing strong demand for B2 Cloud Storage from the AI market, with data stored by AI customers more than doubling year-over-year. It’s also investing in its sales by restructuring its marketing team to target and secure larger customer deals.
The focus on driving B2 Cloud Storage growth is expected to improve profitability, ultimately enabling Backblaze Inc. (NASDAQ:BLZE) to achieve positive adjusted free cash flow by the fourth quarter of 2025. Hence, the company is well-positioned for long-term growth.
9. Dropbox Inc. (NASDAQ:DBX)
Number of Hedge Fund Holders: 29
Dropbox Inc. (NASDAQ:DBX) is a California-based company that provides cloud storage services. It enables users to seamlessly sync files across different devices by creating a special folder that automatically updates with changes made on any linked device. Many individuals, students, professionals, and businesses use it.
The company is pivoting towards AI-powered solutions with its flagship product, Dropbox Dash, to address the challenges of the modern workplace. Employees today struggle to collaborate effectively due to scattered content across numerous cloud tools. Dropbox Dash offers a unified platform for content discovery. It leverages AI to summarize content, answer questions, and provide personalized workspaces.
Dropbox Inc. (NASDAQ:DBX) is initially focusing on its 500,000+ FSS (File Sync and Share) Teams customers for Dash adoption. The company implemented a 20% headcount reduction to align costs with this. The success of Dash will be crucial for the company’s future growth and profitability as it navigates the evolving landscape of AI-powered solutions.
8. Box Inc. (NYSE:BOX)
Number of Hedge Fund Holders: 31
Box Inc. (NYSE:BOX) is a cloud content management platform that empowers organizations to securely store, share, and collaborate on digital content. It offers a comprehensive suite of solutions, including cloud storage, file sharing, synchronization, e-signatures, and other collaboration tools.
Its growth is driven by the increasing adoption of AI within its platform. In Q3, it had a revenue of $276 million, up 5% year-over-year. At BoxWorks, an annual conference held by the company, it unveiled its vision for Intelligent Content Management. This includes Enterprise Advanced, a higher-tier suite offering enhanced AI capabilities such as Box Apps, Box Forms, Box Doc Gen, Box AI Studio, and Box Archive.
It also expanded its AI capabilities with enhanced interactions with content and deepened partnerships with leading AI providers like Anthropic, OpenAI, and Google. This positions Box Inc. (NYSE:BOX) to capture a larger share of the enterprise content management market. The company is well-positioned to capitalize on the growing demand for intelligent content management solutions and drive significant long-term growth.
7. Pure Storage Inc. (NYSE:PSTG)
Number of Hedge Fund Holders: 31
Pure Storage Inc. (NYSE:PSTG) provides high-performance data storage solutions and specializes in flash-based storage systems, software, and services. It’s recognized for its innovative approach to data storage, using flash memory to deliver faster data retrieval speeds compared to traditional hard disk drives (HDDs). This performance advantage is critical for demanding applications such as big data analytics, AI, and high-performance computing.
The company recently secured a design win with a top-four hyperscaler, marking the first instance of a hyperscaler adopting flash storage for its standard infrastructure. The hyperscaler market accounts for 60-70% of all hard disk drives purchased globally. By replacing traditional hard drives with Pure Storage Inc.’s (NYSE:PSTG) DirectFlash technology, the hyperscaler can expect reduced power consumption, increased space utilization, and lower maintenance costs. It’s also expected to double the expected lifetime of the hyperscaler’s storage infrastructure. This breakthrough has left the company anticipating double-digit Exabyte deployments by FY 2027.
The company is strategically investing in its hyperscale business, and while this will impact operating margin in FY 2026, it positions Pure Storage Inc. (NYSE:PSTG) for long-term growth and leadership in the evolving hyperscale data storage market.
6. Silicon Motion Technology Corp. (NASDAQ:SIMO)
Number of Hedge Fund Holders: 34
Silicon Motion Technology Corp. (NASDAQ:SIMO) is a leading provider of NAND flash controllers for a wide range of solid-state storage devices, including SSDs for PCs, data centers, and mobile devices. Its customer base includes NAND flash makers, module makers, and hyperscalers.
The company is capitalizing on the growing PC market, particularly through the introduction of its first PCIe 5.0 controllers, which are responsible for managing data flow between the CPU and components like graphics cards, storage devices, and network cards. This move targets the high-end PC segment, which accounts for ~10-15% of the overall PC market. Its PCIe 5.0 controller, which is the first 6-nanometer 8-channel PCIe Gen5 controller in the market, offers unparalleled performance and best-in-class power consumption.
This entry into the high-end PC market is expected to drive significant revenue and margin growth for Silicon Motion Technology Corp. (NASDAQ:SIMO). The company’s strong position in the market, coupled with its innovative technology, will enable it to further strengthen its market leadership.
Ave Maria Growth Fund stated the following regarding Silicon Motion Technology Corporation (NASDAQ:SIMO) in its first quarter 2024 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) is a fabless semiconductor company that specializes in low-end flash memory controllers. Memory manufacturers often design their own controllers in-house, but the rising cost of developing a chip is making it increasingly beneficial to outsource the more commoditized low-end controller development to a third party like Silicon Motion. This outsourcing trend is set to move from consumer applications into the server end market, and Silicon Motion’s new enterprise controller is well positioned to capitalize on the growth.”
5. NetApp Inc. (NASDAQ:NTAP)
Number of Hedge Fund Holders: 38
NetApp Inc. (NASDAQ:NTAP) provides data management solutions that help organizations modernize their data infrastructures across hybrid and public cloud environments. It offers a portfolio of data storage systems, software, and services, that enable customers to manage, protect, and analyze their data effectively.
It delivered strong FQ2 2025 results, with revenue growing 6% year-over-year, driven by a 19% increase in all-flash storage and strong performance in first-party and marketplace cloud storage services. This was driven by an increasing momentum of its AI initiatives. In Q2, the company witnessed a significant surge in AI and data-lake modernization wins, with traction in sectors like the public sector, manufacturing, financial services, and healthcare.
By leveraging its intelligent data infrastructure platform, NetApp Inc. (NASDAQ:NTAP) helps customers overcome data silos and prepare their data for AI applications. It’s also deepening its partnerships with key industry leaders, such as NVIDIA, Domino Data Labs, and Google Cloud, to deliver cutting-edge AI solutions, which enables it to offer customers a comprehensive and integrated AI experience.
Artisan Mid Cap Value Fund stated the following regarding NetApp, Inc. (NASDAQ:NTAP) in its Q3 2024 investor letter:
“With regard to sales, we exited NetApp, Inc. (NASDAQ:NTAP), an enterprise data storage and solutions company. Shares had moved into the higher end of our range of fair value on strong earnings results and enthusiasm about the long-term growth potential from artificial intelligence for the company’s storage solutions.”
4. Seagate Technology Holdings (NASDAQ:STX)
Number of Hedge Fund Holders: 46
Seagate Technology Holdings (NASDAQ:STX) is a global provider of data storage solutions and specializes in hard disk drives (HDDs), and solid-state drives (SSDs) among other storage devices. It serves a diverse customer base, including original equipment manufacturers, distributors, and retailers.
Revenue for the company surged nearly 50% year-over-year in FQ1 2025, due to a high demand for nearline drives, which are HDDs designed for storing large amounts of data that is not accessed frequently, from major cloud service providers, particularly in the US. The increasing reliance on cloud services has fueled the need for massive storage capacity. HDDs continue to dominate the public cloud storage market, accounting for ~90% of stored bytes.
It expects continued growth in cloud demand, driven by factors such as the increasing adoption of data-intensive applications, the rise of GenAI, and the ongoing expansion of video content consumption. Seagate Technology Holdings (NASDAQ:STX) is well-positioned to capitalize on this growth with its high-capacity nearline drives and innovative technologies like HAMR (Heat-Assisted Magnetic Recording). Its focus on addressing the needs of cloud providers positions it for continued success in the data storage market.
3. Equinix Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix Inc. (NASDAQ:EQIX) is a digital infrastructure company. As the largest pure-play data center REIT in the US, it serves 10,000+ customers, providing critical infrastructure for their data storage, processing, and interconnection needs. It plays a pivotal role in the evolving landscape of data storage and cloud computing, particularly in the context of the AI revolution.
The company’s focus on low-latency access to multiple cloud providers directly supports efficient data storage and processing for AI. It streamlines AI workloads by enabling the rapid transfer of large datasets between on-premises storage, cloud storage, and processing locations.
Its platform’s support for hybrid AI deployments optimizes data storage strategies. Businesses can store data strategically by enabling seamless integration between on-premises and public cloud infrastructure. For instance, less frequently accessed data can be stored cost-effectively on-premises, while leveraging cloud storage for high-performance needs or when data volumes surge.
Its xScale data centers are specifically designed to meet the demanding infrastructure needs of hyperscalers and service providers involved in AI. Equinix Inc. (NASDAQ:EQIX) is playing a vital role in shaping the future of data storage and cloud computing in the AI era.
Baron Real Estate Fund stated the following regarding Equinix, Inc. (NASDAQ:EQIX) in its first quarter 2024 investor letter:
“Following strong relative and absolute performance in 2023, we reduced our position in leading global data center operator, Equinix, Inc. (NASDAQ:EQIX), due to the Fund’s large position size and other compelling new investment ideas that we have been identifying. Equinix continues to be a core position in the Fund, and we remain optimistic about the long-term growth prospects for the company due to its interconnection focus among a highly curated customer ecosystem developed over the past 20-plus years, strong demand and pricing power, favorable supply backdrop, and evolving incremental demand vectors such as AI. We believe Equinix can continue to compound earnings at approximately 10% over the next few years and believe the prospects for strong shareholder returns remain compelling.”
2. Western Digital Corp. (NASDAQ:WDC)
Number of Hedge Fund Holders: 66
Western Digital Corp. (NASDAQ:WDC) is a global technology leader in the design, manufacture, and sale of data storage devices and solutions. It offers a broad portfolio of products, including hard disk drives (HDDs), solid-state drives (SSDs), flash memory, and data storage platforms. It serves customers across various markets, including consumer electronics, data centers, and industrial applications.
The company recognizes the impact of the AI Data Cycle on the data storage industry and has positioned itself to capitalize on this trend. Its focus on delivering high-performance enterprise SSDs is evident in the 76% sequential growth of this segment, reaching the highest revenue level since FQ4 2022.
Its UltraSMR technology in the HDD segment is suited to address the storage demands of the AI Data Cycle. UltraSMR enables organizations to store and manage the massive datasets required for AI model training and deployment by delivering high-capacity, cost-effective storage solutions. By capitalizing on the growth opportunities presented by the AI Data Cycle, Western Digital Corp. (NASDAQ:WDC) is poised to drive future success and solidify its leadership in the data storage market.
Parnassus Mid Cap Fund stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q2 2024 investor letter:
“We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation.”
1. Micron Technology Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology Inc. (NASDAQ:MU) is a global leader in the design and manufacture of memory and storage solutions. It offers a portfolio of products, including DRAM, NAND flash, and other memory and storage technologies, and serves a broad range of markets including data centers, mobile, automotive, and industrial.
It maintains a competitive edge in the storage solutions market through the development of high-density memory chips, utilizing this advantage to cater to the expanding needs of the AI and Data Center sectors. The company recently unveiled a groundbreaking 60TB SSD. This high-performance drive is designed to withstand the demanding workloads of Data Centers and AI applications.
In FQ4 2024, Micron Technology Inc. (NASDAQ:MU) generated $7.75 billion in revenue, a 93% year-over-year increase, primarily driven by demand for its DRAM chips in the AI market. The company now anticipates sustained growth driven by the continued expansion of data centers and the increasing adoption of AI.
Alger Mid Cap Focus Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q3 2024 investor letter:
“Micron Technology, Inc. (NASDAQ:MU) is a leading provider of innovative memory and storage solutions supporting key trends like AI, 5G, machine learning, and autonomous vehicles. Micron’s portfolio includes high-bandwidth memory (HBM), which is critical for efficient AI workloads, along with storage solutions like DRAM, NAND, and NOR. These are sold in various forms such as wafers, components, modules, SSDs (solid-state drives), and MCPs (multi-chip packages). We believe the company is well-positioned to potentially benefit from secular trends in AI, data centers, cloud computing, and 5G markets. In July, shares detracted from performance after management lowered expectations due to the slower-than-expected pace of clearing excess inventory. Weak demand in markets like PCs and smartphones led to lower shipment forecasts for the next fiscal quarter. However, towards the end of the quarter, Micron reported better-than-expected fiscal fourth-quarter results, driven by strong data center demand and continued growth in AI-leveraged HBM sales. Although the share price rose after the announcement, shares were still down overall for the quarter.”
While we acknowledge the growth potential of Micron Technology Inc. (NASDAQ:MU), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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