At a time when Kioxia Holdings' market value has halved from its June peak, Nomura Securities has bucked the trend by increasing its price target for the company, expressing confidence in the ongoing improvement of NAND flash memory supply and demand dynamics.
According to market reports, Nomura Securities issued a research note on July 16, raising its target price for Kioxia Holdings to 126,000 yen from a previous level and reiterating its Buy rating. The core rationale for this upward revision is that NAND bit prices continue to rise amid supply shortages, exceeding prior market expectations. Concurrently, concerns surrounding U.S. government restrictions on exports of advanced AI models are gradually dissipating, which is helping to bolster sentiment regarding AI-related demand.
Driven by these assessments, Nomura also raised its profit forecasts for Kioxia Holdings—lifting the operating profit forecast for fiscal year 2027 (ending March) from 7.0 trillion yen to 7.5 trillion yen, and significantly increasing the forecast for fiscal 2028 from 9.8 trillion yen to 10.7 trillion yen. The target price calculation is based on the fiscal 2028 free cash flow forecast (raised from 6.3 trillion yen to 6.9 trillion yen) and applies a 10x market capitalization-to-free cash flow ratio (equivalent to a 9.0x price-to-earnings ratio based on the fiscal 2028 earnings per share forecast).
It is noteworthy that as investor concerns grow that the AI-driven industry rally may have become excessive, Kioxia's stock price plummeted by as much as 14% during Friday morning trading in Tokyo, marking a 51% decline from last month's high and wiping out at least 29.5 trillion yen in market value. Previously fueled by the artificial intelligence boom, which spurred a surge in demand for memory and data storage, Kioxia's stock had soared over 600% year-to-date by mid-June. Analysts remain optimistic about the company, forecasting an approximate 118% return over the next year. Additionally, adjustments to the Topix index expected in October are anticipated to trigger significant passive fund inflows. However, if the sell-off intensifies, leveraged positions held by Japanese retail investors could pose further downside risks for Kioxia.
Bit Price Growth Exceeds Forecasts, Driven by Supply Constraints
Nomura has revised its bit price growth forecast for Kioxia Holdings for the April-June quarter of 2026 upward from a quarter-on-quarter increase of +65% to +70%, and for the July-September quarter from +20% to +25%.
It is important to note that this view diverges from the expectations of some market research firms. Research firm TrendForce had previously projected that NAND bit prices in the April-June 2026 period would be weaker than levels at the end of March, influenced by a slowdown in consumer electronics demand. However, Nomura cites recent statements from Taiwanese memory module manufacturers, suggesting that bit prices are, in fact, maintaining an upward trajectory.
The report notes that ADATA's SSD-related sales are highly correlated with the performance of Kioxia Holdings. ADATA's SSD-related sales for the April-June 2026 quarter grew significantly by 87% quarter-on-quarter. ADATA management also indicated they expect NAND flash contract prices to rise 35% to 40% quarter-on-quarter in the July-September quarter. This data provides crucial supporting evidence for Nomura's optimistic outlook.
Concerns Over AI Export Restrictions Ease, Alleviating Sentiment Pressure
The report also addresses recent shifts in market sentiment related to U.S. government policies on AI export controls.
A previous industry report dated June 16, 2026, highlighted that U.S. government restrictions on exports of frontier AI models were a significant event impacting AI-related sentiment. OpenAI's latest GPT-5.6 series, released in phases on June 26 in compliance with U.S. government requirements and initially available only to specific, trusted users, had a somewhat negative impact on AI-related market sentiment.
However, with the steady improvement in related news flow since early July and OpenAI's full public release of the GPT-5.6 series on July 9, signs of a recovery in market sentiment have begun to emerge. This shift helps alleviate the uncertainty that had been weighing on AI-related demand expectations, providing positive support for the demand outlook of NAND flash suppliers like Kioxia Holdings.
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