Kioxia Japan Shares Surge Over 660% This Year. Becoming the World’s Top-Gaining Semiconductor Manufacturer, Can Investors Still Buy Now?

From January to March 2026, Kioxia's revenue reached 1.0029 trillion yen, soaring 189% year-over-year, while operating profit surged 15-fold to 596.8 billion yen, hitting a record quarterly high. The average selling price (ASP) of NAND flash memory in US dollars doubled within a single quarter, despite shipments falling approximately 10% quarter-over-quarter.

Explosive growth in NAND demand from AI data centers, coupled with the fact that new supply capacity will not come online until late 2027 at the earliest, is shifting pricing power entirely to original memory manufacturers.

[Q1 FY2026 Guidance, Source: Overview of Kioxia's FY2025 Financial Results ]

Looking forward to the April-June quarter, Kioxia’s guidance is even more remarkable: revenue is projected to reach 1.75 trillion yen, up 74.5% quarter-over-quarter, with operating profit expected at 1.3 trillion yen, up 117% quarter-over-quarter, yielding a profit margin of 74%. This level of profitability has begun to exceed that of software companies typically recognized for high gross margins.

Based on 2027 earnings forecasts, its forward P/E ratio is only 7.9x, representing a roughly 20% discount to SK Hynix, making it appear quite undervalued within the AI sector.

This is the core logic behind Goldman Sachs raising its price target to 93,000 yen; analysts project Kioxia's consolidated operating profit for fiscal year 2028 will surge to the 10 trillion yen level, with gross margins sustained at around 80%. Based on these estimates, the PEG ratio is only 0.10x, suggesting that growth has not been priced in at all.

[Kioxia's 2026 forward P/E ratio is 8.8x, exceeding Samsung Electronics and SK Hynix; Source: Stockanalysis]

At the current share price, the trailing P/E ratio stands as high as nearly 77x with a P/B ratio of 30.2x; its 2026 forward P/E of 8.8x remains higher than Samsung's 5.7x and SK Hynix's approximately 6x.

[Forward P/E for Samsung Electronics and SK Hynix; Source: Stockanalysis]

Market analysts are deeply divided on Kioxia. Among the 14 analysts providing price targets, the most optimistic has a target of 80,000 yen, while the most pessimistic is at just 17,000 yen, representing a nearly five-fold gap. This extreme divergence implies that the market has yet to reach a consensus on the feasibility and sustainability of Kioxia's future earnings.

The duration of the supply-demand gap is the primary source of upside elasticity. Kioxia management previously stated that "the NAND market will be very tight in both 2026 and 2027," with new capacity not expected to come online until late 2027 or 2028 at the earliest. This implies that the pricing environment will remain supported by continuous improvements in the short term.

Concurrently, aligned with the logic for SK Hynix, Kioxia's secondary listing in the U.S. is a structural catalyst for further valuation expansion. Kioxia has announced plans for a U.S. ADS listing. If successful, the accessibility for international investors to allocate to the NAND space will increase significantly, potentially narrowing the valuation gap with U.S. peers like Micron and SanDisk.

Investors should be aware that market bears view NAND as a classic cyclical commodity where the supply-demand gap could shift from "tightness" to "surplus" at any time, a risk repeatedly confirmed by history. Heavy AI orders have occupied NAND capacity; should signals of a marginal slowdown in AI CapEx emerge, current premiums could rapidly unwind.

Furthermore, some analysts contend that the current quarterly operating profit target of roughly 1.3 trillion yen—over 5 trillion yen on an annualized basis—"is likely more than double Toyota's peak earnings." Whether this can be sustained in the short term remains to be seen through upcoming performance reports.

From an optimistic perspective, the supply-demand gap will persist until at least 2028, and a U.S. ADS listing is expected to widen the valuation premium. Furthermore, guidance for a 74% operating margin and a sustained 80% gross margin provides robust support for high profitability.

In terms of positioning, there is little margin for error between the current price and the target price. For short-term investors, the current liquidity environment means entry and exit costs have been systematically elevated, making the risk-reward profile of entering now unfavorable. For long-term investors, however, the accelerated upward revision of earnings data and the widening supply-demand gap continue to support the long-term fundamental logic.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.