-
Palantir saw its share price soar thanks to growing enterprise adoption of its AI software.
-
These two stocks grew even faster as they provide a key component in AI data centers.
-
Both companies produced triple-digit earnings growth over the past year.
Palantir Technologies (NASDAQ: PLTR) is a great representative of the AI stock boom.
The company saw rapid adoption of its software over the past few years, especially among enterprise customers using its Artificial Intelligence Platform (AIP) to increase its accessibility and use cases. That resulted in strong revenue growth and even stronger profits thanks to its expanding operating margin as it scales. Enthusiastic investors rewarded the stock, sending it up another 143% so far this year as of this writing.
But as big tech companies spend more and more on building out massive data centers and filling them with servers, a pair of essential AI hardware makers have seen their fortunes rise in 2025. As a result, both stocks have outperformed Palantir year to date, each rising more than 185% so far.
Here are the two high-flying AI stocks outperforming the market darling.
A lot of attention goes toward which GPUs or AI accelerators hyperscale customers are buying for their data centers. While those chips account for the bulk of spending on a new data center, they're not the only components seeing a massive boost from AI spending.
As developers build bigger and bigger large language models based on billions of pieces of data, they need something to store all of that data. While some of that storage needs to be instantly accessible (or as close to it as possible) by each server, much of it can be held in what's called "nearline" storage. Nearline storage can take a few seconds to access, but it's extremely cheap.
Hard drives are the most cost-efficient form of nearline storage. While solid state drives (SSDs) have displaced magnetic hard drives in personal computers, the cost is significantly higher at the data center level. Using SSDs for storage would cost roughly seven to eight times as much for the same amount of storage.
As a result, hard drive makers Seagate Technology (NASDAQ: STX) and Western Digital (NASDAQ: WDC) have seen demand for their nearline storage product soar. Seagate reported a 52% year-over-year increase in nearline capacity shipments last quarter. Western Digital reported a 36% increase.
That's resulted in some very strong revenue growth and margin expansion. While Seagate and Western Digital's products are interchangeable, there's still a limit on how much they can produce. And with demand climbing for its high-capacity storage solutions, they've been able to exhibit pricing power. Seagate's gross margin expanded 7 percentage points last quarter and Western Digital's expanded 6.1 percentage points.