Kioxia Holdings Corp. released a disappointing earnings outlook for its fiscal half-year, projecting an operating income of ¥3.16 trillion ($19.7 billion), which translates to a weaker-than-anticipated ¥1.89 trillion for the current quarter. This follows a June-quarter operating income of ¥1.27 trillion, which fell short of analyst expectations. The company also announced a 3-for-1 stock split and a buyback of up to ¥800 billion, measures intended to broaden its shareholder base and reduce volatility.
This underwhelming guidance from Kioxia, a key supplier of NAND storage chips for data centers, has fueled concerns that the AI-driven surge in flash memory prices might be moderating. Investors had previously held high hopes for Kioxia, seeing it as a major beneficiary of the historic AI data center buildout. The company's shares have experienced significant fluctuations, briefly becoming Japan's most valuable company before a steep decline erased two-thirds of those gains.
Analysts have reacted cautiously to Kioxia's news. Tomoichiro Kubota, chief market analyst at Matsui Securities, questioned whether the substantial share buyback would be enough to offset the earnings miss. Akira Minamikawa, an analyst at Omdia, noted that Kioxia faces the challenge of attracting U.S. hyperscalers, who have stronger ties with South Korean suppliers and increasingly seek multiyear supply contracts. Kioxia's conservative approach to capacity expansion, aimed at avoiding market saturation, also risks market-share losses to competitors like Samsung Electronics and SK Hynix, who are expected to introduce next-generation NAND chips next year.
Meanwhile, the broader Japanese stock market has shown volatility. The Nikkei 225 closed down 0.88% at 64,362.02, erasing earlier gains and indicating caution among investors. The index swung across a wide range, touching a high of 65,364.73 before retreating to an intraday low of 61,948.23, a spread of over 3,400 points, signaling potential further turbulence. Separately, Japan's Finance Minister Satsuki Katayama is expected to announce joint action with Washington to address the yen's slide to 40-year lows, adding another layer of concern to the market.
