As 2025 comes to a close, the technology sector is once again outperforming all 11 S&P 500 sectors, thanks largely to the ongoing AI boom. The sector has climbed more than 24% this year, fueled by surging demand for artificial intelligence.
But zooming in, a handful of pure-play AI companies not only outperformed the market but the sector as well, leaving competitors in the dust with monstrous gains.
Semiconductor manufacturer Micron Technology (NASDAQ: MU) and AI and cloud computing data storage provider Seagate Technology (NASDAQ: STX) emerged as two of the biggest AI winners in 2025.
But as the calendar gets ready to turn to 2026, investors looking to tap into the AI-fueled bull market via those two stocks may want to proceed with caution.
Micron Was 2025’s Answer to Soaring Chip Demand
Shares of semiconductor maker Micron are up nearly 166% this year. Much of that is attributable to skyrocketing demand for critical AI infrastructure—specifically, high-bandwidth memory, which Micron provides.
Companies have developed an insatiable appetite for Micron’s product portfolio, which includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives (SSDs), memory modules, and embedded memory solutions for a wide range of computing and electronic devices.
Micron supplies components used in data centers, enterprise and cloud infrastructure, client computing, mobile devices, automotive systems, and industrial applications, while also marketing consumer-facing products under its Crucial brand.
Notably, the company’s HBM3E and new HBM4 products, which Micron bills as “the fastest, highest-capacity high-bandwidth memory to advance AI innovation,” have seen such high demand that inventories are already sold out through 2026.
That in turn gives the semiconductor firm significant pricing power.
In addition to heightened AI-driven demand, Micron has benefited from supply shortages and subsequent price hikes that have resulted in its quarterly net income climbing from $1.87 billion in fiscal Q1 (FQ1) to $3.201 billion in FQ4, good for an increase of more than 71%. That has contributed to 10 consecutive quarterly earnings beats.
At the same time, the stock saw its earnings per share (EPS) grow from $1.68 in FQ1 to $2.86 in FQ4. Micron is expected to report its Q1 earnings for its fiscal year 2026 on Dec. 17 after the market closes.
Seagate Has Benefitted From Unquenchable AI Data Storage Needs
Shares of data storage solutions provider Seagate Technology have surged nearly 233% in 2025. The reasons, as with Micron, are rooted in AI.
The company saw a massive increase in demand for high-capacity storage from AI, cloud computing, and data center firms. The company’s advanced heat-assisted magnetic recording (HAMR) technology gave it a competitive edge this year, leading to strong revenues and earnings.
Seagate has beat on earnings in seven of the past eight quarters, while the company’s quarterly revenue growth averaged nearly 33% in 2025.
Much of that was due to the company ramping up its HAMR drives for cloud providers and increasing its data creation.
Strategic partnerships with firms like Acronis, which specializes in cybersecurity, also helped expand its reach into AI-driven data environments. The explosion in data creation from generative AI applications has made Seagate a key player in enterprise-level storage solutions, which enabled the company to capture significant market share that translated into strong earnings throughout 2025.
Wall Street’s Tempered Expectations for MU and STX in 2026
While Micron and Seagate posted eye-catching performances in 2025, those gains are in the rearview mirror. Looking forward, Wall Street is more reserved with its expectations for both stocks.
On Dec. 3, Micron announced that it will be exiting its consumer business, Crucial. According to the company’s press release, this will entail the sale of Crucial consumer-branded products at key retailers, e-tailers, and distributors worldwide. However, the company will continue Crucial consumer product shipments through the end of fiscal Q2 (February 2026).
Micron still carries a consensus Buy rating, with 34 of the 37 analysts covering the company assigning it a Buy and the remaining three holdouts assigning it a Hold. But the average 12-month price target of $242.79 for shares of MU suggests just 4.35% potential upside over the next year.
It is a similar case for Seagate, which carries a consensus Moderate Buy rating. Of the 26 analysts covering the stock, 20 assign it a Buy rating, five assign it a Hold, and one assigns it a Sell.
But analysts are more reserved about STX’s stock performance in 2026 than they are about MU’s, with Seagate receiving an average 12-month price target of $290.22—or just 0.22% potential upside from where shares are trading today.
Current short interest for Seagate stands at nearly 6%—or $3.51 billion—of the float, demonstrating that bears are expecting some degree of correction. That dollar amount represents a more than 197% increase in shorted shares over the same period a year ago.
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The article "How These 2 Stocks Won 2025's AI Race—And What's In Store for 2026" first appeared on MarketBeat.
