As Kioxia's stock price halved from its peak, Nomura Securities made a contrarian move—raising its target price to 1.26 million yen and reiterating a buy rating. The core confidence stems from two key catalysts: NAND bit price increases continue to exceed expectations, with Taiwanese manufacturer ADATA's single-quarter SSD sales surging 87%, confirming tight supply-demand dynamics; and the shadow of U.S. AI export controls is rapidly dissipating as GPT-5.6 becomes fully open.
While Kioxia's market cap has shrunk by half from its June peak, Nomura Securities has contrarily raised its target price for Kioxia Holdings, optimistic about the continued improvement in NAND flash supply-demand dynamics.
According to the Feng Trading Platform, Nomura Securities released a research report on July 16, raising its target price for Kioxia Holdings to 126,000 yen from previous levels and reiterating a buy rating. The core rationale for this increase is: NAND flash bit prices continue to climb against a backdrop of supply shortages, exceeding previous market expectations. At the same time, concerns surrounding U.S. government restrictions on advanced AI model exports are gradually easing, helping to boost sentiment around AI-related demand.
Driven by the above assessment, Nomura simultaneously raised its profit forecasts for Kioxia Holdings—increasing its operating profit forecast for fiscal year 2027 (ending March) from 7.0 trillion yen to 7.5 trillion yen, and significantly raising its forecast for fiscal year 2028 from 9.8 trillion yen to 10.7 trillion yen. The target price calculation is based on the fiscal year 2028 free cash flow forecast (raised from 6.3 trillion yen to 6.9 trillion yen), using a 10x market cap/free cash flow ratio (equivalent to a 9.0x P/E ratio based on fiscal year 2028 earnings per share forecast).
It's noteworthy that investors are increasingly concerned that the AI-driven industry rally has become excessive. In Friday's morning trading in Tokyo, Kioxia's stock price plunged as much as 14%, falling 51% from last month's high, wiping out at least 29.5 trillion yen in market value. Previously driven by the AI boom, market demand for memory and data storage surged, causing Kioxia's stock price to skyrocket over 600% year-to-date by mid-June. Analysts remain optimistic about Kioxia, forecasting a return of approximately 118% over the next year. Additionally, the expected adjustment of the TOPIX index in October is anticipated to bring large-scale passive fund inflows. However, if the decline intensifies, leveraged positions held by Japanese retail investors could expose Kioxia to further downside risks.
Bit Price Increases Exceed Expectations, Supply Shortage is Core Driver
Nomura raised its bit price growth forecast for Kioxia Holdings for the April-June quarter of 2026 from a quarter-on-quarter increase of +65% to +70%, and its forecast for the July-September quarter from +20% to +25%.
It is noteworthy that this assessment diverges from the expectations of some market institutions. Research firm TrendForce had previously forecasted that NAND bit prices in April-June 2026 would be weaker than levels at the end of March, influenced by slowing consumer electronics demand. However, Nomura cited recent statements from Taiwanese memory module manufacturers, believing that bit prices are actually maintaining an upward trajectory.
The report points out that ADATA's SSD-related sales are highly correlated with Kioxia Holdings' performance. The company's SSD-related sales for April-June 2026 increased significantly by 87% quarter-on-quarter. ADATA management also stated that they expect NAND flash contract prices to rise 35% to 40% quarter-on-quarter in the July-September quarter. This data provides important evidence supporting Nomura's optimistic assessment.
AI Export Restriction Concerns Ease, Sentiment Pressure Fades
The report also addresses recent changes in market sentiment surrounding U.S. government AI export control policies.
An industry report released on June 16, 2026, previously noted that U.S. government restrictions on advanced AI model exports were a significant event affecting AI-related sentiment. OpenAI's latest GPT-5.6 series, released in phases starting June 26 in compliance with U.S. government requirements—initially available only to specific trusted users—had a certain negative impact on AI-related market sentiment.
However, with the continuous improvement in related news flow since early July, and OpenAI's full public release of the GPT-5.6 series on July 9, market sentiment has begun to show signs of recovery. This shift helps alleviate the uncertainty that previously suppressed AI-related demand expectations, providing positive support for the demand outlook of NAND flash suppliers like Kioxia Holdings.
Comments