Japan's Kioxia, Down 40% From Its Peak, Faces Views Ranging From Another 40% Drop to a Return to 100,000 Yen

[Tokyo = Financial News, Reporter Seo Hye-jin] Kioxia Holdings, the AI bellwether that had been leading the Japanese stock market, has entered a correction after its share price plunged nearly 40% in just one month. The decline reflects concerns over overheated AI investment and a possible oversupply in memory chips. Market watchers say a short-term pullback is unavoidable, but if earnings and memory prices hold up, the stock could still recover to the 100,000-yen range this year.
On the Tokyo Stock Exchange on the 14th, Kioxia closed at 69,100 yen, up 2,000 yen, or 2.98%, from the previous session. During the day, however, it fell as much as 4,040 yen, or 6.02%, to 63,060 yen, marking its lowest level in about a month and a half. That was roughly 40% below its post-listing high of 112,700 yen, set on June 22. The drop stands in sharp contrast to the first half of the year, when the stock surged more than eightfold and drove gains in the Nikkei 225 Average.
The market points to concerns over overheated AI investment by U.S. tech giants and aggressive capacity expansion by memory chip makers as the main reasons behind the recent correction. Worries have grown that the supply shortage could ease sooner than expected as major players such as SK hynix and Samsung Electronics move to expand High Bandwidth Memory production capacity.
Still, market experts say short-term moves should be separated from the medium- to long-term outlook, Nikkei, Inc. reported.
Hiroshi Namioka, chief strategist at T&D Asset Management, said, "The correction is likely to continue for about another month, but in the medium to long term, the stock will probably try to resume its uptrend." He added, "The current expected price-to-earnings ratio is below 10 times, so valuation pressure is not particularly heavy." He also said foreign investors are likely to return once the correction ends, and noted that a stock split could also serve as a catalyst for a rebound.
Ikuo Mitsui, a fund manager at Aizawa Securities, said the stock could face further downside in the short term, potentially toward the 57,000-yen range, which is its 75-day moving average. Even so, he forecast that "if concerns over excessive AI investment ease, a return to the 100,000-yen range is possible again." He said earnings reports from ASML Holding N.V. (ASML), TSMC, and U.S. hyperscalers will be a key turning point for investor sentiment.
Minori Omaki, an analyst at Tachibana Securities, also said, "The earnings results for April to June, due later this month, will be the biggest variable." She added, "If the company shows strong confidence in NAND prices and earnings, the stock could once again test the area around its post-listing high of 110,000 yen this year."
On the other hand, pessimism remains strong.
Mark Lee, an analyst at Sanford C. Bernstein in the United States, set Kioxia's target price at 40,000 yen on the day and said there is "a possibility of another roughly 50% decline from the current level" at the time, when the stock was trading at 80,000 yen per share. He said current high memory prices and profitability are unlikely to be sustained over the long term, and predicted that NAND prices will inevitably fall once expansion by Chinese memory maker YMTC accelerates.
In fact, YMTC is emerging as Kioxia's biggest rival. According to Counterpoint Research, YMTC's global NAND market share rose to 13% in the first quarter of this year, up 5 percentage points from a year earlier. Kioxia President Hiroo Ota recently acknowledged the company's competitiveness, saying, "The only companies that have commercialized CBA (wafer bonding) technology are us and YMTC."

sjmary@fnnews.com Seo Hye-jin Reporter