Japan’s Kioxia stock is beating Micron, Sandisk, SK Hynix: here’s why

Global investors have focused on the performance of top memory stocks like Micron (MU), Sandisk (SNDK), and SK Hynix this year as they surpass their all-time highs each week. However, Kioxia stock, a top competitor, is beating all of them by a large margin.

Kioxia stock is firing on all cylinders

Kioxia stock price is doing well this year, and is beating most companies in the memory industry. It has jumped by 847% this year and by 4,780% in the last 12 months. This growth has seen it overtake companies like Toyota and Softbank to becoming the biggest Japanese company by market cap. Its valuation has jumped to $370 billion.

Sandisk, the best-performing company in the US, has jumped by 4,755% in the last 12 months and by 795% this year. Micron, which entered the trillion-dollar club, is up by 285% this year, while South Korea’s SK Hynix has jumped by over 358% this year.

The ongoing surge reflects a major turnaround for a company that went public in 2024 at a valuation of less than $5 billion. Indeed, for a long time, it was a struggling memory company that was on the verge of going bankrupt. It had survived years in restructuring as its losses jumped, leading to a $1 billion rescue by the Japanese government.

Kioxia is operating at full capacity

The ongoing Kioxia stock surge is happening because of the surge in its demand as companies have boosted their investments in AI. This is important because the company sells its products to some of the top companies globally like Microsoft and Apple. Other top clients are firms like Dell and HP, which gives it a 25% market share in the NAND industry.

The most recent results showed that Kioxia’s revenue is surging and the management has said that it is operating at full capacity. Some of its hyperscaler clients have even requested long-term contracts to secure its products.

Kioxia’s revenue surged to over 1 trillion yen in the last year, while its operating profit soared to 599.1 billion yen. This growth brought its free cash flow to over 241 billion yen. This growth helped it end the year with over 470 billion yen in cash on its balance sheet.

The management also boosted its guidance, and now expects that its revenue will jump by 74% in the first quarter to 1.75 trillion yen. Its net income is expected to jump by 112% to 870 billion yen.

Kioxia shares face some notable risks

Still, despite these gains, there are signs that Kioxia stock faces some major risks ahead. First, there is a likelihood that the stock will reverse once the AI supercycle starts to cool. That is important because no supercycle lasts forever. For example, the commodity supercycle we experienced during the Covid era ended, with most of those items falling from their peak.

Second, there is a likelihood that the memory supply will start to catch up with demand, leading to lower prices over time. If this happens, we could see Kioxia and its top competitors reverse. 

Kioxia stock chart | Source: TradingView

Finally, technically, Kioxia stock has become highly overbought, with the Relative Strength Index soaring to 75. Also, it remains much higher than its short and longer-term moving averages, raising the risk of a mean reversion. As such, while the rally may continue for a while, there is a risk of a reversal.