Kioxia forecasts $11.8B quarterly profit as AI memory demand surges

Kioxia Holdings said on Friday it expects to report operating profit of 1.89 trillion yen ($11.78 billion) in the July-September quarter, as runaway demand for memory chips from AI data centers continues to supercharge the Japanese chipmaker's earnings.reuters

The forecast, disclosed alongside Kioxia's fiscal second-quarter earnings report, marks another leap for a company that has become one of the clearest beneficiaries of the AI infrastructure buildout. The projection dwarfs the 1.3 trillion yen operating profit Kioxia forecast for the April-June quarter just two and a half months ago.tradingview+1

A Memory Market Under Strain

The result lands as memory costs have emerged as a central tension in Big Tech's AI spending spree. This week's wave of U.S. tech earnings made clear that soaring memory prices are reshaping corporate outlooks. Amazon Amazon.com, Inc. ↘ 2.24% CEO Andy Jassy cited "inflated" memory chip prices as a driver of higher capital expenditure, while Tesla ↗ 0.32% CEO Elon Musk called memory pricing "insane" on his company's earnings call. Apple ↘ 0.80% CEO Tim Cook warned that rising memory costs would weigh on the company's business beyond September, contributing to a weaker-than-expected forecast.cnbc

Aggregate AI spending among hyperscale cloud companies is projected to reach $765 billion this year before climbing to nearly $1.2 trillion in 2027, according to Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38%. That spending is flowing directly into the coffers of memory makers like Kioxia, which confirmed earlier this year that its entire NAND flash production capacity for 2026 is already sold out.finance.yahoo+1

Supply Tightness Fuels Record Earnings

Richard Kaye, portfolio manager for Japanese equities at Comgest, said ahead of the report that supply-demand conditions in the NAND flash memory market would remain tight because meaningful supply increases "will take years". TrendForce noted that Kioxia's earnings were expected to benefit from elevated NAND pricing driven by AI data center procurement.trendforce+1

Kioxia's Q2 revenue guidance of 2.39 trillion yen represents a 35% increase quarter-on-quarter, with the company projecting a non-GAAP operating margin of nearly 80%. The scale of profitability underscores how concentrated pricing power has become among a small number of memory vendors at a time when tech companies are competing fiercely for chip supply.quartr

The Broader AI Cost Equation

For investors, Kioxia's outlook crystallizes a widening divergence in the AI trade: the companies building AI infrastructure are burning cash at historic rates, while their suppliers are posting record margins. Alphabet ↘ 3.58% reported negative free cash flow for the first time on record last week, and Amazon disclosed negative trailing-twelve-month free cash flow of $7.6 billion. A JPMorgan Chase ↘ 0.73% strategist asked in a recent report whether it is "all one big AI trade," noting that Wall Street is increasingly scrutinizing whether hyperscaler spending will generate acceptable returns.cnbc

Kioxia's stock, which has surged several hundred percent since its Tokyo listing, had fallen roughly 60% from recent highs heading into the report amid broader concerns about memory sector valuations.tradingkey