Goldman Sachs calls out Kioxia! Target price raised to 11.6万 yen, Buy rating: AI causes NAND shortage through 2028

AI data center storage demand continues to heat up. In a June 30 report, Goldman Sachs raised its 12-month target price for Japanese NAND flash memory giant Kioxia to 116k yen in one go and maintained a Buy rating. Goldman Sachs believes that the supply-demand tightness in the NAND market has exceeded previous expectations, and this price hike cycle may extend to mid-2027, with some aspects even lasting until 2028.

(Previous summary: Barclays aggressively raised Hynix's target price, doubling it to 2,300 euros)

(Background: Nine major U.S. industries jointly petitioned the Trump administration: Memory price hikes and shortages are killing us)

Table of Contents

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• Second upward revision within one month
• Why NAND won't collapse this time
• Goldman Sachs' two bets, also naming five risks

Key Takeaways

• On June 30, Goldman Sachs raised Kioxia's 12-month target price to 116k yen and maintained a Buy rating.
• NAND supply-demand tightness exceeded expectations; the price hike cycle may extend to mid-2027, with some aspects lasting until 2028.
• Goldman Sachs estimates Kioxia's quarterly operating profit could reach 1.417 trillion yen, higher than its own guidance of 1.298 trillion and Bloomberg consensus of 1.36 trillion.

This wave of AI-driven memory boom is pushing a long-established Japanese manufacturer into the spotlight. In a report released on June 30, Goldman Sachs raised its 12-month target price for Kioxia, the world's third-largest NAND flash memory manufacturer, to 116k yen and maintained a Buy rating. Goldman Sachs' core judgment is that the supply-demand tightness in NAND has exceeded previous expectations, and the price increase cycle may extend to mid-2027, with some aspects even continuing until 2028.

NAND flash memory is the core of SSDs (solid-state drives), retaining data even when power is lost, making it the backbone of AI data center storage architecture. As AI servers and enterprise SSDs increasingly demand high-performance storage, this previously less favored memory has suddenly become a hot investment target.

Second upward revision within one month

This is already the second time Goldman Sachs has raised Kioxia's target price within a month. On May 31, Goldman Sachs upgraded Kioxia from Neutral to Buy and raised the target price from 48k yen to 93k yen in one go; less than a month later, it raised it further to 116k yen. Kioxia's stock price has surged over 660% since the beginning of the year, making it the best-performing semiconductor stock globally.

In the latest report, Goldman Sachs raised its operating profit forecasts for Kioxia for fiscal years 2027 to 2029 (FY3/27 to FY3/29) by 9%, 19%, and 29%, respectively, and also raised EPS forecasts by 10%, 19%, and 29%. On a calendar year basis, Goldman Sachs expects NAND average selling prices to surge in 2026 and then increase another 38% in 2027, far above the previously estimated 27%.

Why NAND won't collapse this time

NAND has always been the most prone to oversupply and the most cyclical in the memory family, because there are more players than in the DRAM and HDD industries. In past cycles, the market always worried that a flood of supply would cause a collapse. But Goldman Sachs believes that the profit peak in this uptrend cycle may be higher than previously assumed by the market, and it can last longer.

Goldman Sachs: The profit peak of this NAND uptrend cycle may be higher than previously assumed by the market, and it can be sustained longer.

The key is that the supply side has put on the brakes. Citing a Japanese channel survey, Goldman Sachs noted that major memory manufacturers are still prioritizing capital expenditure on DRAM rather than aggressively expanding new NAND capacity. Against the backdrop of expanding AI demand, new NAND supply will not be significantly released until 2028. The big players prioritizing spending on DRAM essentially extends the life of NAND shortages.

On the demand side, three sources provide support: rising demand for enterprise SSDs, substitution demand due to tight HDD supply, and the possibility that U.S. export controls may impact equipment supply to some Korean manufacturers' factories in China.

Goldman Sachs' two bets, also naming five risks

Kioxia management has recently signaled a greater emphasis on price and profit margins. Goldman Sachs said the company is not rushing to lock in shipments with long-term agreements, but is instead emphasizing price discipline and gross margin levels. Since some pricing negotiations for bit shipments (measured by storage capacity) in the first quarter were not completed when the company released its earnings guidance, Goldman Sachs expects Kioxia's operating profit for the first quarter of fiscal year 2027, to be announced on July 31, could reach 1.417 trillion yen, higher than the company's own guidance of 1.298 trillion and the Bloomberg consensus of 1.36 trillion.

In terms of investment logic, Goldman Sachs focuses on two points. First, as the world's third-largest NAND manufacturer, Kioxia has relatively strong cost competitiveness; second, the company is gradually developing products for data centers, which is the fastest-growing segment of the NAND market. As demand for high-performance storage from AI servers and enterprise SSDs increases, Kioxia has the opportunity to achieve higher profit margins during the price increase cycle.

However, Goldman Sachs also warned that NAND's cyclicality has not disappeared. Risks include a slowdown in AI investment, the rise of Chinese NAND manufacturers, rising costs or capacity utilization fluctuations compressing margins, a significant appreciation of the yen, and weakening demand for NAND in non-AI applications.

Frequently Asked Questions

Why did Goldman Sachs raise its target price for Kioxia?

Goldman Sachs believes that AI data centers are driving up NAND storage demand, supply-demand tightness has exceeded previous expectations, and the price hike cycle may extend to 2028. Therefore, it raised the 12-month target price to 116k yen and maintained a Buy rating.

What is Kioxia, and what is its relationship with NAND?

Kioxia, formerly Toshiba Memory, is the world's third-largest NAND flash memory manufacturer. NAND is the core of SSDs, retaining data even when power is lost, making it the backbone of AI data center storage architecture.

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