Abstract:
On Monday, the share price of Japan's NAND flash memory leader Kioxia plunged 17% as the company's cautious performance guidance on Friday disappointed investors, and the market once again worried that the explosive growth driven by artificial intelligence (AI) may be slowing down. As of press time on Monday, Kioxia's share price fell 13.29% to 11,680 yen, down nearly 70% from the historical high set in June this year. However, the stock has still doubled since the beginning of the year.
In June of this year, benefiting from the storage super cycle driven by the AI wave, Kioxia once became the listed company with the highest market value in Japan.
What triggered Monday's sell-off was not a bad earnings report. The financial report released by Kioxia last Friday showed that in the second fiscal quarter of fiscal year 2026 as of the end of September, the company's revenue reached 2.48 trillion yen, a year-on-year increase of 453.20%. The single-quarter revenue has exceeded the approximately 2.34 trillion yen of the previous fiscal year; the adjusted operating profit surged 2181.10% year-on-year.
The problem lies in the outlook. Kioxia on Friday forecast operating profit of 2 trillion yen (approximately $12.7 billion) in the December quarter, lower than analysts’ consensus forecast of 2.35 trillion yen.
The forecast suggests growth will be almost stagnant compared with the 1.99 trillion yen operating profit recorded in the September quarter. Over the past few quarters, Kioxia's operating profits have been showing a strong upward trend.
KioXia attributed this lack of growth mainly to issues with shipment timing rather than deteriorating demand.
At the request of customers, some orders originally scheduled for delivery this quarter have been advanced to the September quarter; while other orders have been postponed to the March quarter of the following year because the proportion of orders for enterprise-class storage products has increased, and such products require a longer production cycle.
KioXia Chief Financial Officer Yoshihiko Kawamura said in a conference call last week that the company expects to return to a rapid growth track in the March quarter of next year, and demand from AI data center operators remains strong.
He said that the company's planned production capacity for next year has been sold out, and more than half of the production capacity for the following year has been allocated. Some major customers have even begun negotiating contracts for 2029 and beyond.
However, investors have become increasingly skeptical of the growth narrative painted by Kioxia, as company executives sound cautious in looking ahead.
Kioxia's potential disadvantage may be that it focuses on NAND flash memory, while its Korean rivals also sell DRAM chips - another key component in AI computers - and therefore have stronger bargaining power.
In the second quarter of 2026, the average selling price of KIOXIA NAND increased by approximately 70% from the previous quarter, but by the third quarter, the increase had plummeted to approximately 20%. This price signal also alarmed the market and became one of the key factors suppressing investor sentiment.
For memory chip stocks, the market usually pays more attention to the speed of price changes rather than the absolute price level. This signal is interpreted as a possible turning point in this upward cycle.
On Monday, Samsung Electronics fell more than 3% in early trading, and SK Hynix fell more than 1%. However, they both reversed their decline. As of press time, Samsung's share price rose 0.44%, and Hynix's share price rose 2.75%.
Another important factor exacerbating Monday's decline is the inherent fragility of Kioxia's shareholder structure. Among all companies listed on the Tokyo Stock Exchange, Kioxia has the highest concentration of leveraged long positions. Once a negative catalyst occurs, financing traders will face pressure to sell.
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