The Best-Performing AI Stock Nobody Is Talking About Has Outrun Nvidia by a Mile

Nvidia (NASDAQ:NVDA | NVDA Price Prediction) is up over 93% in the past year, though it is up less than 2% in the past six months. On the other hand, Seagate (NASDAQ:STX) is up a massive 717% in the past year and up 151% in the past six months alone. As of this writing, the stock has surged over 15% in the past 24 hours due to a crushing earnings beat.

It’s obviously not surprising that a smaller company has more agility than a multi-trillion-dollar company. Still, Seagate remains underappreciated for its size due to how quickly it has surged.

Let’s take a look at what it does and whether or not it is worth buying after such an increase.

What Seagate does and why it’s surging

Nvidia trains AI models, but Seagate is also a part of that equation since the data AI models train on needs to be stored somewhere. Seagate makes HDDs, which are high-capacity drives that are relatively cheap and very efficient for storing large amounts of data. Modern computers run on SSDs and NVME drives, but HDDs are still very much in demand due to how cheap they are for their exceptional capacity.

Seagate has the supply-side advantage that is rarely noticed. Building a hard drive factory takes years, and Seagate’s head start has given it a massive moat. When demand exploded in 2025, prices for high-capacity HDDs jumped 60% between November 2025 and February 2026. Margins have expanded significantly, with the EBITDA margin at 27%.

Seagate’s CFO Gianluca Romano said on the call that the vast majority of nearline capacity is allocated during the next 4 quarters, with build-to-order contracts finalized through fiscal 2027 that lock in mix, pricing, and volume.

Explosive growth can continue for longer than you think

AI companies are no longer limited to text-based AI models and are training on high-quality video and image AI models. These models need significantly more storage for training, and also produce content that requires a lot of storage. AI models can create 4K videos and images en masse. The generated content usually stays in their data centers for a long time unless you are using an open-source model locally.

And even text models are storage-heavy. Users are constantly uploading books, images, PDFs, and computer programs.

Whatever your view may be about AI, we can all agree that the usage of these AI models is only going to increase. Most companies are yet to fully adopt and embrace AI, and the number of users is set to increase.

This is why Seagate raised its annual revenue growth target to a minimum of 20% from the low-to-mid teens. Q4 guidance came in at $3.45 billion in revenue, up 41% year-over-year. Storage stocks have always been cyclical, but the continued demand for AI could lead to a Micron (NASDAQ:MU)-esque situation where you see shortages instead.

Can STX stock keep outperforming NVDA?

In the short term, I expect Seagate to keep trouncing Nvidia’s gains, but the long term depends entirely on how long this AI boom lasts. If the training phase continues and companies succeed in exponentially improving their AI models, Nvidia can outperform Seagate. NVDA stock trades at just 25 times forward earnings.

On the other hand, if current trends continue where inference computing is outgrowing training needs, Seagate can outperform. Hard Drives will always be needed regardless of whether or not AI models are being developed. Users are constantly uploading files, and there’s demand even outside of just AI.

A hyperscaler like Google can use drives for both cloud storage and for AI training. GPUs can’t be used that flexibly. I expect at least a year or two of outperformance from Seagate.

Easy gains have been made, but more is likely ahead

You’re paying 23 times forward earnings for a data center supplier with a market cap below $150 billion. I wouldn’t be surprised to see Seagate at over $300 billion by year-end.

Revenue is expected to grow at a 32%-plus clip in the coming years, with EPS growing at 70-80% annually. That’s faster than Nvidia and the vast majority of GPU stocks. Even if Wall Street holds the premium at 30x forward earnings, the stock can double within a year from now.