Memory and Storage Stocks Left Out of Tech’s Market-Leading Rally

(Bloomberg) -- Makers of the memory chips and storage hardware that underpin some of the most in-demand technologies have been left out of this year’s tech stock rally.

Western Digital Corp., which makes hard disk drives and NAND chips, has lost almost a third of its value in 2020, while rival Seagate Technology Plc is down 19%. Micron Technology Inc., the biggest U.S. memory-chipmaker, has fallen 7%. Meanwhile, the tech-heavy Nasdaq Composite Index has gained 16%, and the Philadelphia semiconductor index is up 11%.

Much of the underperformance is tied to concern that memory demand from cloud, enterprise and PC customers will decline in coming quarters, leaving the market oversupplied and prices susceptible to declines, according to Cowen analyst Karl Ackerman. He expects the supply-demand balance to remain favorable in the second half of this year, especially for NAND memory. The group’s latest quarterly earnings results also are likely to come in better than expected, he wrote in a research note earlier this week.

Technology stocks have outperformed all other S&P 500 sectors this year as stay-at-home measures in response to the coronavirus have boosted demand for digital services from remote working software to data center computing power. Those trends are showing no signs of abating with U.S. infections continuing to rise.

Seagate will be the first to report quarterly results on July 28, followed by Western Digital on Aug. 5.

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