(Bloomberg) — Kioxia Holdings Corp.’s shares rose 16% to a new high on Monday, as buy orders flooded in after the memory supplier reported soaring profit and gave an outlook that trounced estimates.
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The Tokyo-based chipmaker said it expects to earn an operating profit of ¥1.3 trillion ($8.2 billion) in the three months to June, more than the record profit it earned for the full year ended March. Analysts from Nomura to JPMorgan raised their Kioxia price targets significantly following its earnings report and comments from executives on Friday that said supply will remain tight throughout 2027.
The bullish outlook is the latest sign of meteoric demand for hardware needed to run artificial intelligence services and the resulting shortage in conventional memory chips. Kioxia, whose shares are already up more than 300% this year, specializes in NAND, chips used to store data in PCs, smartphones and in data centers alongside AI accelerators such as those made by Nvidia Corp.
“This is the scorching summer for NAND,” SMBC Nikko Securities analyst Takeru Hanaya said. “We do not see any need for concern over a loosening supply-demand balance.”
Kioxia, which was spun out of Toshiba Corp. in 2018, said it expects demand to strengthen further across a wide range of customers. It’s also in discussions for long-term contracts with several large-scale AI data center clients that seek to secure supplies for calendar 2027 and 2028.
For the March quarter, Kioxia’s operating profit climbed past expectations, surpassing that of Toyota Motor Corp., making the chipmaker one of Japan’s most profitable businesses.
Kioxia Chief Financial Officer Yoshihiko Kawamura also said the company plans to announce detailed measures next month to enhance shareholder returns and is considering dividend payouts.
NAND prices more than doubled in the March quarter and are expected to rise further through the rest of this year due to tight supply conditions, the company said. For years, Kioxia struggled to compete against bigger rivals Samsung Electronics Co. and SK Hynix Inc., with less of a cushion to invest during downturns, however the AI boom has stimulated multiyear demand that has disrupted the usual boom-bust cycle for memory makers.
–With assistance from Vlad Savov.
