Kioxia Q1 profit misses estimates, announces 1-for-3 stock split

Kioxia reported Q1 operating profit of 1.27 trillion yen, missing the 1.37 trillion yen consensus, and announced a 1-for-3 stock split.

Goldman Sachs and Citi had projected operating profit of 1.417 trillion yen and 1.40 trillion yen respectively, according to their June research notes. The company's own May guidance had called for 1.298 trillion yen in operating profit.

Operating profit surged from 449.0 billion yen a year earlier, while net profit of 842.17 billion yen compared with 182.8 billion yen in the prior-year period. The net profit figure also missed the 973.81 billion yen consensus estimate.

The earnings miss comes as Kioxia shares have fallen nearly 66 percent from their June peak of 112,700 yen, closing at 39,500 yen on July 30. The 1-for-3 stock split will make shares more accessible to retail investors but does not change the company's underlying value.

The results arrive against a backdrop of sector-wide volatility in AI memory stocks. The Philadelphia Semiconductor Index fell 2.23 percent on July 28, with SanDisk dropping over 11 percent and Nvidia falling nearly 5 percent. The selloff was triggered by concerns over Nvidia's $750 billion revolving credit facility, according to TradingKey.

Bain Capital, which led the acquisition of Toshiba Memory in 2018, liquidated its entire Kioxia stake in early July for approximately $17 billion, marking the largest single return in Japan's private equity history. The exit removed a long-term overhang on the stock but also prompted investors to reassess the company's medium-term value.

NAND supply and demand remain tight, with TrendForce projecting a 4 to 5 percent supply deficit in 2026. However, supply growth is expected to outpace demand in the second half of 2027 as Samsung, SK Hynix, and Kioxia expand capacity, while China's YMTC plans to more than double its output by 2027.

Goldman Sachs noted that pricing for about 30 percent of Q2 shipment volume had not yet been locked in as of the May guidance release, meaning actual transaction prices will directly affect next quarter's results. TrendForce forecasts global smartphone production will decline 15 to 20 percent year-on-year in 2026, adding pressure on consumer NAND demand even as enterprise SSD orders remain strong.

The earnings miss shows that even strong year-over-year growth may not satisfy investor expectations in a market that has already priced in aggressive AI-driven demand. Investors will watch management's Q2 guidance and any share buyback announcement on the earnings call for direction on NAND pricing and capacity discipline.

This article is for informational purposes only and does not constitute investment advice.