What Kioxia said and how the market reacted
Tokyo-based Kioxia expects operating profit of ¥2 trillion this quarter, missing the ¥2.35 trillion analysts were looking for and implying prices will be roughly flat quarter over quarter. That follows a mid 20% increase in NAND flash average selling prices in the three months to September, a comedown from a 70% surge the quarter before.
Investors hit sell. Shares dropped 11% on Tradegate Friday after the update. The stock is down around 60% from its June peak, underscoring how quickly the mood has turned.
Why pricing guidance jarred with tight supply
Executives said the run of extreme price spikes is losing momentum. On the call, finance chief Akira Menju said, "Given how much selling prices have already risen, it remains unclear at this point whether prices will continue rising in fiscal 2027, even at a gradual pace."
That caution met a tight-supply message. Leadership expects shortages to last into the next fiscal year, noted that all production capacity for 2027 has been allocated, and said long-term deals with hyperscalers already cover well over half of projected 2028 shipments. Analysts pushed back. That drew criticism, including from Kenji Yasui, research head at UBS Securities Japan, who pressed, "You say supply and demand will be extremely tight heading into the next fiscal year, but that the (price) outlook is uncertain. From a market perspective, you would normally think prices would continue to rise for a while," before asking, "Are you just being conservative?"
Macro nerves did not help. Alphabet noted that, even as it increases AI investment, its core advertising business is struggling, a warning that erased nearly $500 billion in market value. Amazon.com and Intel also reported disappointing results. Earlier in the week, bullish outlooks from Samsung and SK Hynix briefly lifted chip stocks, only for a broad selloff to knock them back Friday.
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Expansion plans and analyst outlook
Even with the softer guide, Kioxia's latest quarter delivered. Operating profit surged 22-fold to ¥1.99 trillion, matching estimates, and the company announced its first-ever interim payout set at ¥90 per share. The former Toshiba unit has also warned against pushing prices too far for fear of alienating customers, even as big tech demand has been strong.
Next year, Kioxia aims to float American depositary receipts to support financing of more than ¥5 trillion in capital expenditures in Japan alongside production partner Sandisk Corp. over the coming six years. Bloomberg News has previously reported that a US listing might bring in no less than $10 billion. The move in the US echoes SK Hynix's ADR debut earlier this year and coincides with domestic share repurchases; in August, Kioxia wrapped up an ¥800 billion buyback only 10 days after it was announced.
Bloomberg Intelligence expects growth to reaccelerate in fiscal 4Q ending March despite third quarter guidance coming in below consensus. It sees NAND bit demand rising in the low 20% range in 2027, supporting shipments toward fiscal 2028, with a tight supply demand balance and a richer mix of higher value server products potentially lifting per bit prices. It also expects third quarter bit shipments to be roughly flat sequentially, with a higher enterprise mix pushing some units into the fourth quarter.
What this means for your portfolio
The message is mixed: supply stays tight into next year, but price momentum is cooling. Kioxia has secured long-dated commitments for 2028 shipments, aims for data centers to eventually exceed 60% of sales to improve visibility, and is developing solid state drives that sit closer to AI accelerators to ease pressure on costly DRAM-based high bandwidth memory.
In plain English: the AI memory story continues, but the easy pricing wins are slowing. Watch how fourth quarter sales and profit ramp, how the ADR plan progresses, and the pace of new capacity. Those markers will shape the next move for memory makers and anything in your portfolio tied to their cycle.
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