Kioxia posts an earnings miss after its stock price is cut in half
Kioxia released its quarterly results for April through June on Friday afternoon, reporting weaker-than-expected performance that suggests the artificial-intelligence-driven surge in flash-memory prices may be losing momentum. Revenue for the quarter ended in June more than quadrupled year over year to 1.77 trillion yen. Operating profit soared 27-fold to 1.27 trillion yen, but fell short of the market forecast of 1.37 trillion yen. Net profit was 842.17 billion yen, also below expectations. Kioxia shares closed 17.7% higher at 46,500 yen on Friday in Japan. The stock reached 112,700 yen in late June, making Kioxia Japan's largest company by market capitalization, but fell more than 58% in just one month. Although the quarterly results showed substantial growth, the earnings miss could further undermine investor confidence in the scale of artificial-intelligence spending and the semiconductor industry's outlook. Continued increases in flash-memory prices have been a central part of the investment case for Kioxia's stock. Samsung Electronics, SK Hynix and Kioxia itself are all expanding production capacity. TrendForce forecasts that memory supply will exceed demand in the second half of 2027. That forecast has been a major reason for the broad, sharp pullback in semiconductor stocks recently. Bain Capital sold its entire Kioxia stake in early July, raising about $17 billion. The sale also fueled market speculation, with some investors reassessing Kioxia's long-term value and quickly following with their own selling. In its latest earnings report, Kioxia forecast that revenue for the fiscal second quarter ending in September could rise 35% from the previous quarter to 2.39 trillion yen. Operating profit is expected to increase 49% sequentially to 1.89 trillion yen. However, that growth rate does not match market expectations for strong artificial-intelligence spending and may indicate that Kioxia is not confident flash-memory prices will continue their historic surge. Omdia analyst Akira Minamikawa also said Kioxia faces challenges in winning orders from large U.S. hyperscale data-center customers, where South Korean suppliers typically have a greater advantage. Those data-center operators generally offer multiyear supply contracts, giving chip suppliers clearer visibility into demand. The earnings miss could trigger Kioxia's next decline. At the same time, the company announced a stock split and a share-buyback program that could help stabilize the stock price. Kioxia approved a 1:3 stock split, which will reduce the amount investors need to buy the shares and could broaden the shareholder base. The company also said it would repurchase up to 30 million shares between Aug. 3 and Oct. 30, for a total amount not exceeding 800 billion yen.
Revenue for the quarter ended in June more than quadrupled year over year to 1.77 trillion yen. Operating profit soared 27-fold to 1.27 trillion yen, but fell short of the market forecast of 1.37 trillion yen. Net profit was 842.17 billion yen, also below expectations.
Kioxia shares closed 17.7% higher at 46,500 yen on Friday in Japan. The stock reached 112,700 yen in late June, making Kioxia Japan's largest company by market capitalization, but fell more than 58% in just one month.
Although the quarterly results showed substantial growth, the earnings miss could further undermine investor confidence in the scale of artificial-intelligence spending and the semiconductor industry's outlook. Continued increases in flash-memory prices have been a central part of the investment case for Kioxia's stock.
Samsung Electronics, SK Hynix and Kioxia itself are all expanding production capacity. TrendForce forecasts that memory supply will exceed demand in the second half of 2027. That forecast has been a major reason for the broad, sharp pullback in semiconductor stocks recently.
Bain Capital sold its entire Kioxia stake in early July, raising about $17 billion. The sale also fueled market speculation, with some investors reassessing Kioxia's long-term value and quickly following with their own selling.
In its latest earnings report, Kioxia forecast that revenue for the fiscal second quarter ending in September could rise 35% from the previous quarter to 2.39 trillion yen. Operating profit is expected to increase 49% sequentially to 1.89 trillion yen. However, that growth rate does not match market expectations for strong artificial-intelligence spending and may indicate that Kioxia is not confident flash-memory prices will continue their historic surge.
Omdia analyst Akira Minamikawa also said Kioxia faces challenges in winning orders from large U.S. hyperscale data-center customers, where South Korean suppliers typically have a greater advantage. Those data-center operators generally offer multiyear supply contracts, giving chip suppliers clearer visibility into demand.
The earnings miss could trigger Kioxia's next decline. At the same time, the company announced a stock split and a share-buyback program that could help stabilize the stock price.
Kioxia approved a 1:3 stock split, which will reduce the amount investors need to buy the shares and could broaden the shareholder base. The company also said it would repurchase up to 30 million shares between Aug. 3 and Oct. 30, for a total amount not exceeding 800 billion yen.