Kioxia shares plunge 17%, AI memory supercycle may be nearing an inflection point

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On Monday, shares of Kioxia, Japan's leading NAND flash memory maker, plunged as much as 17% at one point, as the company's cautious earnings guidance issued last Friday disappointed investors and revived market concerns that the explosive growth momentum driven by artificial intelligence (AI) may be slowing.

As of Monday's press time, Kioxia's stock was down 13.29% at 11,680 yen, nearly 70% below the all-time high set in June this year. However, year to date, the stock is still up as much as twofold.

In June this year, buoyed by the memory super-cycle driven by the AI wave, Kioxia briefly rose to become the highest-valued listed company in Japan.

The trigger for Monday's selloff was not poor financial results. Kioxia's earnings report released last Friday showed that in the second quarter of fiscal 2026 ended September, the company's revenue reached 2.48 trillion yen, up 453.20% year on year, with single-quarter revenue already exceeding the approximately 2.34 trillion yen for the entire previous fiscal year; adjusted operating profit surged 2,181.10% year on year.

The problem lay in the outlook. Kioxia forecast last Friday that operating profit for the December quarter would be 2 trillion yen (about $12.7 billion), below the analysts' consensus estimate of 2.35 trillion yen.

That forecast implies growth has nearly stalled compared with the 1.99 trillion yen in operating profit recorded in the September quarter. In the past several quarters, Kioxia's operating profit had been on a strong upward trend.

Kioxia attributed the weak growth mainly to shipment timing issues rather than deteriorating demand.

At customers' request, some orders originally scheduled for delivery this quarter were pulled forward to the September quarter, while other orders were pushed back to the March quarter of next year, because of a higher proportion of enterprise storage product orders, which require longer production cycles.

Kioxia Chief Financial Officer Yoshihiko Kawamura said on a conference call last week that the company expects to return to a rapid growth trajectory in the March quarter next year, and that demand from AI data center operators remains strong.

He said the company's planned capacity for next year has already sold out, and more than half of the capacity for the year after has been allocated. Some major customers have even begun negotiating contracts for 2029 and beyond.

However, investors are increasingly skeptical of the growth narrative Kioxia has painted, because company executives have struck a cautious tone when looking ahead.

Kioxia's potential disadvantage may lie in its focus on NAND flash memory, while its South Korean competitors also sell DRAM chips—another key component in AI computers—and therefore have stronger bargaining power.

In the second quarter of 2026, Kioxia's average NAND selling price rose about 70% quarter on quarter, but by the third quarter the increase had plunged to about 20%. This price signal also alarmed the market and became one of the key factors weighing on investor sentiment.

For memory chip stocks, the market usually focuses more on the pace of price changes than on absolute price levels, and this signal was interpreted as a possible inflection point in the current upcycle.

On Monday, Samsung Electronics fell more than 3% in early trading and SK Hynix dropped more than 1%, but both later reversed their losses; as of press time, Samsung's stock was up 0.44% and Hynix's stock was up 2.75%.

Another important factor exacerbating Monday's decline was the inherent fragility of Kioxia's shareholder structure. Among all listed companies on the Tokyo Stock Exchange, Kioxia has the highest concentration of leveraged long positions, and once a negative catalyst emerges, margin traders come under pressure to sell.

(Source: Cailian Press) Body middle Embedded advertisement