Ephemeral Gains: Two Tech Stocks

Data Center

The market, as always, offers its little dramas. Each year, a few stocks briefly catch the light, promising a radiance that rarely lasts. But occasionally, one sustains the illusion, at least for a time. This past year has seen Western Digital (WDC 8.26%) and Micron Technology (MU 2.61%) – purveyors of digital memory – ascend with a vigor that feels, if not entirely justified, certainly… noticeable. The surge, predictably, has been attributed to the insatiable appetite of artificial intelligence, a field that seems to promise everything and deliver, thus far, mostly expense accounts.

Western Digital has risen, a rather astonishing 465% in the last twelve months. Micron, not to be outdone, has managed a respectable 313%. Such figures, of course, invite skepticism. One wonders if the enthusiasm is based on genuine prospects, or merely a collective forgetting of past disappointments. Still, even after this display, a certain appeal remains.

Both companies occupy positions of some dominance, though dominance, one should remember, is a fleeting thing. They benefit, undeniably, from the current frenzy surrounding AI infrastructure. Micron manufactures the high-bandwidth memory chips that these data centers crave – a market where it stands as one of three principal players. It’s a ‘supercycle,’ they say – an extended period of demand exceeding supply. One imagines the executives at Micron are enjoying the moment, knowing that such periods rarely last.

Western Digital, dealing in hard disk storage, enjoys an even more secure, if somewhat less glamorous, position. It is one of only two major players in its industry, a fact that offers a degree of protection, but also invites the scrutiny that comes with limited competition. Like Micron, it is experiencing a surge in demand, fuelled by the endless construction of data centers, each one a monument to our collective digital obsession.

Forecasts predict a fifteen-fold increase in demand for the high-bandwidth memory chips that Micron produces by 2035. Western Digital’s storage market is expected to grow at a compound annual rate of 24% through the same period. Such numbers are impressive, of course, but one has learned not to place too much faith in projections. The future, as always, is uncertain.

The valuations, at first glance, appear reasonable. Western Digital trades at 25 times earnings, which is, surprisingly, below the S&P 500 average. Its five-year price/earnings-to-growth (PEG) ratio is around 0.9, placing it, tentatively, in value territory. Micron, at 36 times earnings, appears less appealing, but a forward P/E of just 11 suggests a degree of potential. Its PEG ratio, at just under 0.7, is even more attractive. But these are merely numbers, and numbers, one finds, can be deceiving.

One can see, therefore, a certain logic to the enthusiasm. Dominance in their respective industries, reasonable valuations, and the promise of growth. Yet, one also remembers the countless other companies that have promised so much and delivered so little. The market is a fickle mistress, and fortunes, like memories, are often fleeting.

Perhaps these two stocks will continue to prosper. Perhaps they will succumb to the inevitable forces of competition and technological change. It is difficult to say. The future, as always, remains shrouded in a gentle, melancholic mist. And the market, indifferent to our hopes and fears, simply goes on.

2026-02-11 14:22

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