NAND maker Kioxia reports FY Q2 operating profit up 22x YoY to ~$12.7B, in line with est., but forecasts Q3 operating profit of ~$12.7B, below ~$14.9B est.

The cost of high-density storage chips used in servers and data centers is stabilizing after a period of rapid increases.

Kioxia Holdings Corp. reported a substantial increase in its operating profit for the second fiscal quarter, which surged 22 times year-over-year to approximately $12.7 billion, meeting expectations. However, the NAND flash memory manufacturer's forecast for the third fiscal quarter operating profit was set at around $12.7 billion, falling short of the estimated $14.9 billion. This revised outlook suggests a slowdown in the rapid price increases for flash memory chips, which had been significantly boosted by demand from the artificial intelligence sector.

The NAND market, driven by AI infrastructure build-outs, experienced unprecedented price surges. Kioxia's forecast signals that this aggressive growth phase for memory prices is likely concluding, indicating a potential normalization of costs for components crucial to AI hardware. This moderation affects the profitability calculations for AI hardware manufacturers and cloud providers who have been investing heavily in expanding their capacity.

As the tailwinds from extreme AI-driven demand begin to recede, the focus will likely shift to supply-demand balances and broader market cycles. Investors and competitors will closely monitor whether this trend continues across the NAND market, potentially leading to more predictable pricing and inventory management strategies for the industry's key players moving forward.