Micron Technology has been one of the top performers on the stock market in 2026, with its shares rising an impressive 62% this year, as of this writing. The memory specialist’s share price rally is driven by a terrific increase in revenue and earnings, and the good news is that it can sustain its growth.
Even with its strong showing, Lumentum (NASDAQ: LITE) and Western Digital (NASDAQ: WDC) have outperformed Micron this year. While Lumentum is up 90% in 2026, Western Digital has posted an 77% gain.
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Importantly, both these tech stocks are likely to soar higher as each should benefit from lucrative artificial intelligence (AI)-fueled growth trends. Let’s take a closer look at the catalysts that could send them soaring.
AI data centers need fast connectivity to move massive datasets quickly. This ensures that AI workloads — such as training large language models or inference applications — aren’t hindered by slow data transmission.
Lumentum’s optical and photonic products help solve this potential bottleneck. The company sells switches, optical products, and lasers focused on enhancing the bandwidth of networks and enabling high-speed data transfers. Not surprisingly, its products are in great demand from hyperscalers.
As noted by Lumentum CEO Michael Hurlston on the company’s February earnings call:
We are now recognized as a foundational engine of the AI revolution. Virtually every AI network is powered by Lumentum technology, either through our direct hyperscaler partnerships or as the critical component supplier that enables our network equipment manufacturer customers.
The robust demand for Lumentum’s networking products is evident in its remarkable revenue and earnings growth. The company released its fiscal 2026 second-quarter results (for the three months ended Dec. 27, 2025) on Feb. 3. Its revenue in the first six months of the fiscal year jumped by an impressive 62% to $1.2 billion.
Even better, Lumentum’s margin profile is improving due to higher factory utilization rates, a more favorable product mix, and higher pricing. These factors explain why Lumentum’s non-GAAP earnings jumped by a whopping 367% year over year in the first half of the fiscal year to $2.80 per share.
This red-hot growth isn’t going to slow down anytime soon. Lumentum anticipates a stronger year-over-year increase of 85% in revenue in the current quarter, which is well above the growth it has clocked in the first half. The midpoint of its earnings guidance stands at $2.25 per share, a jump of almost 4x over the year-ago period’s reading of $0.57 per share.
As the build-out of AI data centers isn’t showing any signs of slowing, it is easy to see why analysts anticipate Lumentum’s healthy bottom-line growth momentum will continue.
So, don’t be surprised to see Lumentum stock rise further as it is poised to deliver remarkable earnings growth in the short and long run.
AI data centers have driven a storage boom, which isn’t surprising, since the huge datasets needed for AI training and inference must be stored somewhere. This is the reason why the demand for hard-disk drives (HDDs) has simply taken off.
Tom’s Hardware reported in November 2025 that large-capacity HDDs used in data centers have a lead time of two years. Western Digital is a beneficiary of this red-hot demand, which is fueling a major increase in HDD prices. The prices of popular HDDs increased at an average monthly pace of 46% from September 2025 to December 2025.
Not surprisingly, Western Digital’s revenue in the first six months of fiscal 2026 (which ended on Jan. 2, 2026) increased by 26% year over year to $5.83 billion. The favorable pricing environment explains why Western Digital’s earnings have doubled over the same period to $3.92 per share. What’s worth noting is that the company has sold out all of its available HDD capacity for 2026.
CEO Irving Tan pointed out in the company’s January earnings call:
As we highlighted, we’re pretty much sold out for calendar ’26. We have firm POs with our top seven customers. And we’ve also established LTAs with two of them for calendar year ’27 and one of them for calendar year ’28.
Western Digital is therefore now entering into long-term agreements with customers for HDD capacity over the next three years. This should ensure continued growth in the company’s revenue and earnings. Another important point to note is that the AI-centric storage market’s revenue is anticipated to increase at a 25% compound annual growth rate through 2032, according to a third-party estimate.
So, the strong earnings growth that analysts expect from Western Digital should continue beyond the next couple of fiscal years.
This robust earnings growth should ideally be a tailwind for this tech stock, which is why investors can consider buying Western Digital before it skyrockets further.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lumentum, Micron Technology, and Western Digital. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks That Are Quietly Outperforming Micron Technology in 2026 With 76% and 82% Gains was originally published by The Motley Fool