AI defense contractor Palantir PLTR has amassed a cult following, a $370 billion valuation, and one of the richest valuations of all time. However, after ascending nearly 2,000% from its Oct. 2020 IPO and joining the all-important S&P 500 index, the company has hit a setback. And after a recent slide in its shares, it now has competition atop the S&P 500.
Over the last week, a 10% rally in shares of digital storage company Seagate Technology STX has helped it quietly displace the one-time best performer in the index. Up 113% year-to-date, Seagate is now the best-performing stock in the index, while Palantir sits at #2.
Seagate, which makes hard disk drives, has been a beneficiary of hyperscale and AI computing. Its revenue grew more than 39% in its 2025 fiscal year, which ended in June, thanks to demand from cloud customers seeking larger storage capacity for new data centers.
Its margins and net income have improved too. Over the last year, the company reported a 7% increase in gross margin, putting it at a record 37.9%. It credited “increased adoption of [its] high capacity nearline products and ongoing pricing actions.”
Sitting on the cutting edge of HDD storage, the company reported that its average capacity per drive was 13 terabytes in the latest quarter. However, many data center customers are interested in even larger drives sold by the storage company, including drives up to 28 terabytes in size. Revenue from these larger-format, nearline products grew 52% year-over-year.
All-in-all, it shipped more than 162 exabytes of HDD capacity in its final quarter of fiscal 2025. That’s equivalent to the combined storage capacity of over 1.265 billion iPhones (assuming the base model is 128 GB.)
Seagate is not the only storage company benefiting from the AI boom. Not far behind #2 Palantir is one of its largest competitors, Western Digital WDC, which is making a play for S&P stardom too. Sitting high and mighty at #3 in the index’s year-to-date returns, the company has also doubled since the start of 2025, buoyed by similar circumstances and sales.
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