AI Storage Stocks Surge as PayPal Plunges 10% on Weak Earnings

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U.S. stocks open higher as storage names rally and PayPal sinks

U.S. stocks started the day with gains, as investors showed a bit more willingness to take risks. Companies involved in artificial intelligence, particularly those making data storage solutions like Micron and Western Digital, saw the biggest increases. However, PayPal’s stock fell around 10% after the company predicted lower profits.

Summary

  • At the U.S. market open, the Dow Jones Industrial Average gained 0.45%, the S&P 500 rose 0.57%, and the tech-heavy Nasdaq Composite climbed 0.76%, according to Gate market data.
  • Storage and memory names led early sector moves, with Micron Technology up about 6%, SanDisk adding 3%, and Western Digital gaining 3.5% as investors rotated into hardware tied to AI and data center demand.
  • In contrast, PayPal shares fell roughly 10% at the open following its latest earnings report, extending a sell-off driven by weak profit guidance and ongoing concerns over its core branded-checkout business.

U.S. stock markets started the day higher. The Dow Jones Industrial Average rose 0.45%, the S&P 500 increased by 0.57%, and the Nasdaq Composite climbed 0.76%. This indicates investors were cautiously optimistic, with gains seen in established companies, major growth stocks, and technology firms.

Recent market activity has been uncertain. Investors have been reacting to both surprisingly high inflation reports and positive earnings from large technology companies. This has kept major stock market indexes close to their recent peaks, but with significant differences in how individual stocks are performing.

Indexes tick up on risk-on open

Initially, the market saw gains in sectors like technology and those tied to economic cycles. Specifically, companies involved in data storage, semiconductors, and artificial intelligence saw strong performance, while some consumer and financial technology stocks declined due to individual company news.

Storage stocks extend AI-driven run

Stocks related to data storage are still performing well, with Micron Technology leading the way, jumping around 6% in early trading. SanDisk and Western Digital also saw gains, rising approximately 3% and 3.5% respectively.

In early April, companies specializing in memory and storage—like Micron, SanDisk, and Western Digital—experienced significant stock increases, with gains of up to 10% for some. Investors began viewing these companies as key players in the growing artificial intelligence infrastructure, rather than simply as businesses tied to the often-fluctuating personal computer market.

According to analysts at TradingKey and others, growing demand for AI servers, large data centers, and high-speed memory is causing investors to reconsider how they value storage companies. Strong financial results and optimistic forecasts from these companies are further supporting this shift in perspective.

PayPal dives 10% post-earnings

Following that news, PayPal’s stock price fell significantly, dropping about 10% after the company reported its latest financial results and offered a forecast that disappointed investors.

According to Reuters, the company now expects its profits for 2026 to remain flat or grow by just a small amount. This is significantly lower than what analysts on Wall Street were predicting – around 8%. Recent financial reports also showed that both revenue and earnings per share were lower than expected.

The stock has struggled this year, reaching a low of around $39.95 in February and currently trading about 49% lower than it was a year ago. This decline reflects doubts about the company’s potential to boost growth in its branded checkout system and successfully compete with rivals like Apple Pay and other digital wallets.

Despite recent announcements from PayPal about cost reductions, stock buybacks, and a new CEO, investors are still primarily watching for growth in revenue. The 10% drop in stock price today indicates these concerns haven’t been addressed.

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2026-05-05 19:06