Forget Wall Street's conservative pricing models for the memory cycle; the reality in the NAND market is more fervent than imagined. On May 18, cross-verification from the latest research reports by JPMorgan Chase and Bank of America Merrill Lynch revealed a stark reality: pricing power for NAND is now firmly in the hands of the supply side. Kioxia's latest financial results and guidance not only comprehensively surpassed expectations, but the magnitude of its average selling price (ASP) surge left the market stunned. Driven by AI-fueled demand for eSSDs (enterprise solid-state drives) and extremely restrained industry capital expenditures, the structural supply-demand imbalance is expected to persist until 2027, creating significant upside risk for global NAND ASP forecasts. JPMorgan Chase subsequently raised its target price for Kioxia sharply from 38,000 yen to 80,000 yen (based on a 7x P/E for FY2026/2027), making it the highest target price in the market. This implies substantial revaluation potential on top of the stock's 326% surge already this year. Financial Performance and Guidance Both "Off the Charts," ASP Surge Outpaces Peers Kioxia delivered an impeccable report card for the fourth quarter of fiscal year 2025 (calendar Q1 2026). Quarterly revenue reached 1,000.3 billion yen (a staggering 189% year-over-year increase, 84% quarter-over-quarter), and operating profit hit 596.8 billion yen (a 16-fold increase year-over-year, a 4-fold increase quarter-over-quarter). What truly shocked the market was its pricing power. Bank of America noted that Kioxia's ASP for the quarter doubled sequentially (a rise exceeding 100%), a full 20 percentage points higher than the performance of its South Korean memory peers (approximately 80% growth). Although shipment volume declined 10% sequentially, affected by planned maintenance and prior inventory allocation, the sales proportion of SSDs and storage increased from the mid-50% range in the previous two quarters to 60%. This optimization of the product mix directly drove the profit explosion. Even more astonishing is its guidance for the first quarter of fiscal year 2026 (calendar Q2 2026): revenue is projected to reach 1,750 billion yen (a 5-fold year-over-year increase, 75% quarter-over-quarter), and operating profit is expected to reach an astounding 1,298 billion yen (a 29-fold year-over-year increase, 13x quarter-over-quarter). Bank of America analysis suggests this revenue guidance implies a roughly 70% sequential increase in NAND ASP for Q2, far surpassing market consensus (below 50%). Extremely Restrained Capital Expenditures, Supply-Demand Imbalance to Persist Until 2027 Why are NAND prices so resilient? The answer lies in the industry's rare "supply discipline." JPMorgan Chase pointed out that Kioxia's capital expenditure guidance for FY2026 is only 450 billion yen, meaning the capex-to-sales ratio is merely 5% (the average over the past five years exceeded 20%). The company explicitly stated it will continue disciplined investment without rapid expansion, focusing primarily on BiCS 8 equipment and R&D for the next-generation BiCS 10. While the supply side maintains restrained bit growth in the "high-teens %" range, a structural shift is occurring on the demand side. Generative AI is accelerating the adoption of server storage, with demand tilting towards high-performance inference products (the outlook for TLC NAND is significantly stronger than for QLC NAND used to replace nearline HDDs). JPMorgan Chase expects this situation of demand exceeding supply to continue until 2027, and projects that Kioxia's ASP/bit growth for calendar year 2026 will exceed 250%, driven by product mix improvement and successful price increases. Against the backdrop of soaring spot and contract prices, Kioxia is locking in long-term gains. Management revealed that in Q4, it had already signed some medium-to-long-term agreements (LTAs) with customers covering calendar years 2027-2028 and plans to steadily increase such agreements. JPMorgan Chase believes LTAs will ultimately become a key factor in Kioxia's valuation re-rating. With high operating leverage and industry-leading low bit costs, JPMorgan Chase forecasts Kioxia will generate 17 trillion yen in free cash flow over the next three years. Industry Chain Cross-Verifies "Super Cycle," NAND Pricing Faces Significant Upside Risk Integrating Kioxia's financials with Bank of America Merrill Lynch's industry tracking data, the current strength of NAND prices has exceeded most institutions' expectations: NAND contract prices (512Gb wafer) are currently around $25, approximately 10 times higher than the $2.5 bottom in February 2025; NAND spot prices have risen over 50% year-to-date and are about 8 times higher than the February 2025 low ($2.4); Client SSD prices (for PCs) doubled in April from the end of 2025, whereas the full-year 2025 increase was only about 35%-40%.

Kioxia's robust performance is not an isolated case. Data from downstream players in the industry chain are cross-verifying this super cycle. Bank of America data shows that Taiwan-based NAND module maker Phison Electronics delivered "super-cycle level" performance in April: sales surged 237% year-over-year, with a pre-tax profit margin as high as 45% and a net profit margin of 38%. Faced with Kioxia's guidance and Phison's data, Bank of America acknowledged there is currently very high upside risk to market forecasts for global NAND ASP. Whether it's Bank of America's own previous forecasts (predicting sequential growth of 34%, 9%, and 3% for Q2, Q3, and Q4 respectively) or the bullish forecasts from groups like TrendForce (predicting 70-75% growth in Q2 followed by only 8-13% growth thereafter), all appear overly conservative in the face of the current reality.