Seagate $STX ( ▲ 4.06% ) and Western Digital $WDC ( ▲ 5.41% ) slipped on Wednesday after a report from The Information suggested Microsoft is running into resistance from customers who do not want to pay higher prices for AI-optimized software. Microsoft disputed the report and said it has not lowered any quotas, but the headline amplified a growing concern across the tech sector. Investors want to know whether AI can generate enough real revenue to justify the enormous spending from hyperscalers.
That anxiety spilled into storage stocks. Hard drive makers have been huge winners this year as Wall Street bet on a long runway of AI-driven demand for cheap data storage. Expectations for massive data center buildouts helped push Seagate and Western Digital into the ranks of the S&P 500’s top performers.
The sell-off does not change that both companies are still sitting on monster gains for the year. Seagate and Western Digital remain the second- and third-best-performing stocks in the index, up roughly 200 percent and 250 percent. But Wednesday’s dip showed just how sensitive AI-linked names are to any hint that customers may not be ready to pay for the future they are being sold.