Despite a significant recent pullback in its share price, analysts maintain a bullish stance on Japanese memory chip giant Kioxia Holdings, believing the stock could resume its upward trajectory once supply-demand dynamics improve.
In recent weeks, global pressure on the artificial intelligence and semiconductor sectors has led to a sharp decline in Kioxia's share price. As of last Friday, July 18th, the stock had fallen to ¥52,110 per share (approximately $320), more than halving from the all-time high reached just a month prior.
This sell-off has been fueled by growing market skepticism over the sustainability of AI investments and expectations of weakening memory chip prices due to competitor capacity expansions. Technical selling pressures have also played a role, including negative spillover effects from leveraged single-stock exchange-traded funds in South Korea.
Reasons for Analyst Optimism
Despite the price action, several institutions argue that the company's fundamentals remain intact. Kazuyoshi Saito, a senior analyst at Iwai Cosmo Securities, has maintained his price target of ¥132,000, stating, "The fundamentals have not changed at all. The profitability and growth logic supported by strong AI demand remain solid. Once supply-demand distortions like the South Korean ETFs subside, positive catalysts such as strong earnings will drive a share price recovery."
The current average analyst price target for Kioxia stands at ¥121,959, representing a potential upside of roughly 130% from the current trading price. This gap is the largest among the top 100 companies by market capitalization on the Tokyo Stock Exchange's Topix index, far exceeding the 63% seen for the second-ranked company, Fujikura.
Recent Rating Actions
Brokerage firms have recently been upgrading their ratings. Nomura Securities raised its target price on Kioxia from ¥115,000 to ¥126,000 last Thursday. Analyst Virginia Wang noted in a report that NAND flash memory prices are expected to continue rising due to supply shortages. Huaxing Research also increased its target price to over ¥100,000 on Monday.
Diverging Views on Recovery Timing
However, there is disagreement regarding the timing of a potential rebound. Ikuo Mitsui, a fund manager at Aizawa Securities, suggests that recent share price volatility and fund flows related to South Korean ETFs mean Kioxia may not regain upward momentum until at least late August. "Many investors will not concentrate their holdings in Kioxia again and are more likely to diversify into other attractively valued individual stocks," he said.
Despite this, the bullish camp remains substantial. Yoshiharu Izumi, a senior analyst at Phillip Securities Japan, pointed out, "The recent weakness is primarily driven by technical factors, including selling from overseas ETFs and margin trading by Japanese retail investors." He maintains his profit forecast target of ¥143,000.
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