Kioxia's Profit Surge Masks Mounting Investor Anxiety Over Chip Supply Glut

Kioxia shares plunge 38% from record as NAND oversupply fears trump 30-fold profit leap. AI SSD demand surges but technical signals show waning momentum. Rebound hopes from US inflation data.

Kioxia's shares closed at €382.10 on Wednesday, extending a slide that has wiped more than 26% off the stock over the past month and 38% since its June 22 record of €621. The flash-memory specialist now trades a shade below its 50-day moving average of €403.65, a technical signal that traders read as further evidence of waning momentum.

Yet the company is in the midst of a profit explosion that would normally send a stock screaming higher. For the quarter ending June 2026, Kioxia expects operating profit of ¥1.3 trillion — roughly $8 billion — a thirty-fold leap from the ¥45 billion it earned in the same period a year earlier. For the full fiscal year 2025, which ended in March, revenue climbed 37% to ¥2,337.6 billion and operating profit surged 93.4% to a record ¥876.2 billion, propelled by insatiable demand for enterprise SSDs used in AI data centers. Enterprise-SSD contract prices rose around 80% in the first quarter alone.

The gulf between those numbers and the stock's recent trajectory reflects a sudden shift in market sentiment. Just weeks ago, Kioxia was a poster child for Japan's AI boom, briefly becoming the country's most valuable company by market capitalization on the back of a sevenfold year-to-date gain. Now investors are fretting that rivals Samsung Electronics and SK Hynix are adding capacity so quickly that the NAND flash market could tip into oversupply. The annualized 30-day volatility of 167.63% underscores the frayed nerves.

A sharp rebound across the Asian semiconductor sector on Wednesday offered some relief. The trigger was a lower-than-expected US inflation print on July 14 — the annual rate came in at 3.5% versus a consensus 3.8% — which reignited hopes of easier monetary policy and sparked a broad tech rally. SK Hynix surged more than 11% in Seoul, Samsung added roughly 6.8%, but Kioxia's gains were more muted, leaving the stock with a relative strength index of 45.5, squarely in neutral territory and suggesting the worst of the sell-off may have passed.

Kioxia is not standing still. The company plans to invest an average of ¥470 billion annually from fiscal 2026 through 2028 to bolster output. At its Kitakami facility, Fab2 is already producing 332-layer BiCS FLASH, the tenth-generation 3D NAND, in a joint venture with Sandisk. A higher-volume ramp of 245-terabyte QLC enterprise SSDs is slated for the second half of 2026. Junichiro Yaguchi, Kioxia's managing executive officer, has said he expects tight supply conditions to persist until at least 2027 as manufacturers prioritize advanced memory chips for AI over standard commodity flash.

The company is also pushing ahead with plans for a US listing, seeking access to deeper capital markets to compete with Samsung and China's YMTC. CEO Hiroo Ota has framed the AI-driven demand surge as a structural shift, arguing that the strength of the flash-memory market will endure as artificial intelligence becomes a pillar of society.

For now, the market is weighing two competing narratives: a profit and demand trajectory that looks unimpeachable against the risk that the industry's collective capacity expansion will eventually flood the market. The next set of quarterly reports from the broader memory sector will likely tip the scales one way or the other.