JPMorgan and Bank of America Merrill Lynch believe that the explosion in AI-driven eSSD demand, combined with extremely restrained capital expenditures in the industry, has given suppliers firm control over NAND pricing.$Kioxia Holdings (285A.JP)$Earnings reports and ASP guidance have comprehensively surpassed expectations, with structural supply-demand imbalances expected to persist until 2027. The industry chain has cross-verified the onset of a 'super cycle,' and global NAND prices face significant upward risks.
Forget Wall Street’s conservative pricing models for memory cycles; the reality of the NAND market is more frenzied than imagined.
On May 18, according to information from the Chasing Wind Trading Platform, the latest research reports from JPMorgan and Bank of America Merrill Lynch cross-validated a harsh reality: NAND pricing power has been firmly taken over by the supply side.
Kioxia's latest earnings report and guidance not only comprehensively outperformed expectations but also shocked the market with the sharp rise in its average selling price (ASP). Driven by the explosion in AI-powered eSSD (enterprise-grade solid-state drives) demand and the industry’s highly restrained capital spending, structural supply-demand imbalances are expected to continue until 2027, posing significant upward risks to global NAND ASP forecasts.
JPMorgan subsequently raised Kioxia’s target price significantly from 38,000 yen to 80,000 yen (based on a P/E ratio of 7 for fiscal years 2026/2027), making it the highest target price in the market. This suggests that despite already surging 326% this year, there remains substantial room for revaluation.
Both performance and guidance have 'exploded' beyond expectations, with ASP growth surpassing peers.
Kioxia delivered an impeccable report for the fourth quarter of the 2025 fiscal year (corresponding to the first quarter of 2026). Revenue for the quarter reached 1.0003 trillion yen (a year-on-year increase of 189% and a quarter-on-quarter increase of 84%), while operating profit hit 596.8 billion yen (a year-on-year increase of 16 times and a quarter-on-quarter increase of fourfold).
What truly shocked the market was its pricing power. Bank of America noted that Kioxia’s ASP doubled quarter-on-quarter (an increase exceeding 100%), surpassing South Korean memory peers’ performance (approximately 80% growth) by a full 20 percentage points.
Although shipments declined by 10% quarter-on-quarter due to scheduled maintenance and prior inventory allocation, the sales share of SSDs and storage products increased from the mid-50% range in the previous two quarters to 60%. Optimization of product mix directly fueled the profit surge.
Even more astonishing is its guidance for the first quarter of fiscal year 2026 (the second quarter of calendar year 2026): revenue is expected to reach 1,750 billion yen (a fivefold year-over-year increase and a 75% quarter-over-quarter increase), with operating profit reaching an impressive 1,298 billion yen (a 29-fold year-over-year increase and a 13x quarter-over-quarter increase).
Bank of America noted that this revenue guidance implies a sequential growth of approximately 70% in NAND ASP for the second quarter, far surpassing market consensus (below 50%).
Extremely restrained capital expenditures will prolong the supply-demand imbalance until 2027.
Why are NAND prices so resilient? The answer lies in the industry's rare 'supply discipline.'
JPMorgan pointed out that Kioxia's capital expenditure guidance for fiscal year 2026 is only 450 billion yen, meaning capital expenditure as a percentage of sales will be just 5% (compared to an average of over 20% in the past five years). The company has clearly stated that it will continue disciplined investment without rapid expansion, focusing primarily on BiCS 8 equipment and the development of next-generation BiCS 10.
While the supply side maintains 'high-teens' restraint in bit growth, structural shifts are occurring on the demand side. The acceleration of generative AI is driving the adoption of server storage, with demand tilting toward high-performance inference products (the outlook for TLC NAND is significantly stronger than for QLC NAND used to replace nearline HDDs).
JPMorgan expects this situation of demand exceeding supply to persist until 2027, assuming that improvements in product mix and successful price increases will drive Kioxia’s ASP/bit growth to exceed 250% in calendar year 2026.
Amid soaring spot and contract prices, Kioxia is securing its long-term success.
Management revealed that in the fourth quarter, some mid-to-long-term agreements (LTAs) covering calendar years 2027-2028 were signed with customers, with plans to steadily increase such agreements. JPMorgan believes LTAs will ultimately become a key factor in revaluing Kioxia.
With extremely high operating leverage and industry-leading low bit costs, JPMorgan forecasts that Kioxia will generate 17 trillion yen in free cash flow over the next three years.
Cross-verification across the industrial chain points to a 'super cycle,' with NAND pricing facing significant upside risks.
Based on Kioxia's financial report and Bank of America's industry tracking data, the current strength of NAND prices has exceeded the forecasts of most institutions:
The contract price for NAND (512Gb wafer) is currently around $25, approximately 10 times higher than the low of $2.5 in February 2025.
Spot prices for NAND have risen more than 50% year-to-date, approximately eight times higher than the February 2025 low of $2.4.
Client SSD prices (for PCs) doubled in April compared to the end of 2025, whereas the total increase for 2025 was only about 35%-40%.
Kioxia's robust performance is not an isolated case; downstream data across the supply chain are cross-verifying this super cycle.
Data from Bank of America shows that Phison Electronics, a **** NAND module manufacturer, delivered 'super-cycle-level' results in April: sales surged 237% year-over-year, with pre-tax profit margins reaching 45% and net profit margins at 38%.
In light of Kioxia's guidance and Phison's data, Bank of America acknowledged that there is extremely high upside risk in the current market forecasts for global NAND ASP.
Both Bank of America's previous forecast (projecting quarter-on-quarter growth of 34%, 9%, and 3% for the second, third, and fourth quarters, respectively) and bullish forecasts from organizations like TrendForce (predicting a 70-75% increase in the second quarter followed by only 8-13% growth thereafter) now appear overly conservative in the face of current realities.
Editor/Rocky