According to Zhitong Finance APP, from the world's best-performing stock to the worst performer in the memory chip sector, the rapid reversal in Kioxia Holdings' share price has set a high bar for its upcoming earnings report.
Global chip stocks were hit by a fierce selloff amid concerns over whether major technology companies can sustain funding for AI infrastructure construction, dragging Kioxia's share price down as well. In addition, Kioxia faces intense competition: South Korean rivals hold a market advantage, while the threat from Chinese manufacturers is also growing.
As of Thursday, Kioxia's Tokyo-listed shares had fallen 60% from their June high, making them the worst performer over the same period among a basket of major global memory chip stocks tracked by Citic CLSA. The market broadly expects the company's earnings report, due late Friday, to show four-digit profit growth for a third consecutive quarter, making it difficult for the company to surprise investors again.
"The market already expects a strong quarter, so delivering another decent set of results may struggle to change market sentiment," said Charles-Henry Monchau, chief investment officer at Banque Syz. He is looking for signals that prices will continue to rise, as well as signs of progress on long-term agreements with hyperscale cloud providers.
Full-Year Gain Still 280%, but the Halo Is Fading
Despite the recent sharp pullback, Kioxia's shares are still up 280% year to date, having at one point been the world's best-performing stock and briefly ranking among Japan's most valuable companies. Robust demand from major technology companies drove product prices sharply higher, lifting memory-related stocks, until the latest wave of doubts about artificial intelligence hit.
NAND flash prices have continued to rise, and AI-driven supply shortages have even pushed up prices for mature chips used in products such as personal computers and smartphones. But Monchau said the market has long known this, and sales of data center and enterprise solid-state drives (SSDs) are the more important focus.
"The enterprise SSD segment has higher margins, and customer relationships tend to be more durable," he said. "Once it falls behind, Kioxia will be more exposed to the consumer market, where demand is weaker and pricing power is more limited."
Kioxia's NAND market share trails Samsung Electronics and SK Hynix. The two South Korean giants have an advantage in data center sales because they can bundle memory chips with high-bandwidth memory (HBM). Kioxia has no HBM products.
Another worrying factor is the growing strength of Chinese competitors such as Yangtze Memory Technologies. According to a Counterpoint Research report, in the second quarter of 2026, Yangtze Memory surpassed Kioxia and Micron Technology in NAND shipments to rank third.
Valuation Near Historic Lows, Can Dividends Be the Turning Point?
Kioxia's shares have become cheap, currently trading at a forward price-to-earnings ratio of about 3.5 times, close to their historical low and below the 5.2 times average of the basket tracked by Citic CLSA. Hironori Takei, a strategist at Resona Holdings, said the company has indicated plans to start paying dividends in the next fiscal year or earlier, which could help improve its valuation.
"Once a dividend is introduced or raised, it is not easy for a company to cut it," Takei said. "So it sends a signal to the market that management itself expects strong earnings to continue."
On Friday, Kioxia's shares fell as much as 9.9% before the earnings release. Earlier, peer and joint venture partner SanDisk reported better-than-expected results and guidance, but its shares still fell, highlighting how deep investor skepticism is about the durability of the memory cycle and the AI boom.
Ashwin Binwani, founder of private investment firm Alpha Binwani Capital, said such skepticism makes it crucial for Kioxia to win long-term customer commitments on favorable terms.
"We want to know how much demand has already been locked in, how broad the customer base is, and whether profitability can be maintained as price increases slow," he said. "For us to add to Kioxia, we need evidence that its earnings are not only beating expectations but also becoming more sustainable."
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