Kioxia's strong guidance reinforces upside in NAND read-through, benefiting SEC/Hynix

Overview

This report uses Kioxia's CY1Q26 results and CY2Q26 guidance as a read-through to assess the impact on Korean memory suppliers SK Hynix and Samsung Electronics. The key conclusion is that Kioxia's revenue, ASP and operating margin guidance are stronger than expected, indicating that the recovery in NAND pricing and margins may be stronger than Goldman Sachs currently forecasts for SEC/Hynix.

Core views

First, Kioxia's CY2Q26 dollar revenue guidance implies 70% qoq growth, but the company said the impact from bit shipment growth would be limited, so the strong growth is mainly driven by ASP increases, creating upside risk to SEC and Hynix's NAND ASP forecasts. Second, Kioxia's CY2Q26 OPM guidance is 74%, while SEC/Hynix's current NAND OPM forecast is around 60%, indicating Korean peers' margins may still be underestimated. Third, Kioxia maintains its view that NAND supply will remain tight in 2026 and 2027, with demand growth primarily coming from AI data centers and enterprise customers. Fourth, Kioxia may pursue an ADR listing; if the investor base expands, it could indirectly lift sentiment toward SK Hynix because of its equity ownership in Kioxia.

Analysis framework

The report uses a peer read-through approach, comparing Kioxia's NAND ASP, bit shipment, revenue and OPM trends with SEC/Hynix on a cross-company basis, and combines that with Kioxia management's comments on 2026-2027 supply and demand, AI data center demand and a potential ADR listing to judge the impact on Korean memory companies' earnings estimates and sentiment.

Methodology notes

• Valuation methodsP/B target price methodology

  SK Hynix target price methodology

  Goldman Sachs uses a 12-month target price methodology for SK Hynix based on the average 2026E/2027E P/B, with a target P/B multiple of 2.9x, implying a target price of W1,800,000.

• Valuation methodsEV/EBITDA SOTP target price methodology

  Samsung Electronics target price methodology

  Goldman Sachs uses a 2026E EV/EBITDA-based SOTP methodology for Samsung Electronics common shares, with a 12-month target price of W320,000; the preferred share target price is W245,000, based on a 23% target discount to the common share.

• factorGS Factor Profile

  Goldman Sachs factor profile

  GS Factor Profile compares a stock's attributes relative to the market and sector peers across four dimensions: Growth, Financial Returns, Multiple and Integrated, with Integrated computed from a combination of growth, returns and valuation percentiles.

• scenarioM&A Rank

  M&A probability framework

  Goldman Sachs uses M&A rank to assess the probability of a company becoming an acquisition target, where 1 represents high probability, 2 medium probability, and 3 low probability; if the ranking is 1 or 2, an M&A component may be included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Hynix Inc. (000660.KS)

  One of the primary read-through beneficiaries; Goldman Sachs rates it Buy

  Strengths

  NAND ASP and OPM may benefit from Kioxia's strong guidance; it holds a material stake in Kioxia, and a potential ADR listing could improve market sentiment.

  Weaknesses

  The target price of W1,800,000 offers limited upside versus the latest reported close price of W1,819,000.

  Comparison

  Kioxia CY1Q26 OPM was 60%, Hynix NAND OPM was 57%; if Kioxia's CY2Q26 OPM rises to 74%, Hynix's roughly 59% forecast may be too conservative.

  Risks

  Worsening supply-demand conditions in memory, delayed technology migration, weaker smartphone/PC/server demand, and declining AI-related capex.

• Samsung Electronics (005930.KS)

  One of the primary read-through beneficiaries; Goldman Sachs rates it Buy

  Strengths

  NAND ASP and OPM have room for upward revisions; the common share target price of W320,000 still offers upside versus the W270,500 close price.

  Weaknesses

  The business is more diversified, and mobile phone margins, mobile OLED share and HBM progress also affect overall profit.

  Comparison

  SEC's NAND CY1Q26 OPM was 58%, close to Kioxia's 60%; Kioxia's CY2Q26 OPM guidance of 74% suggests SEC's roughly 62% forecast may be too low.

  Risks

  Worsening supply-demand conditions in memory, a sharp contraction in smartphone margins, and loss of market share in mobile OLED.

• Samsung Electronics (Pref) (005935.KS)

  Goldman Sachs rates it Buy, with target price based on the discount to the common share

  Strengths

  The preferred share target price of W245,000 implies higher upside versus the W179,400 close price.

  Weaknesses

  Valuation depends on the common share performance and the preferred-share discount assumption.

  Comparison

  The target discount is 23% relative to the common share, derived from the dual-factor model discount and the average preferred-share discount over the past month.

  Risks

  Downward revision to common share fundamentals, a widening preferred-share discount, and a weakening memory cycle.

• Kioxia Holdings (285A.T)

  The source company for the read-through; Goldman Sachs rates it Neutral

  Strengths

  CY2Q26 revenue and OPM guidance are strong, and the company maintains a view of tight NAND supply-demand balance; a potential ADR listing may broaden the investor base.

  Weaknesses

  The report does not disclose ADR listing details, and Kioxia itself is rated Neutral.

  Comparison

  Kioxia's CY2Q26 revenue guidance is +70% qoq and OPM guidance is 74%, above SEC/Hynix's roughly 60% OPM forecast.

  Risks

  A decline in NAND prices, supply-demand improving faster than expected, and uncertainty over the listing plan.

Key data

• Kioxia CY2Q26 revenue guidanceDollar revenue +70% qoqThe company said bit shipment would increase but with limited impact, implying ASP increases are the main driver.
• SEC/Hynix NAND ASP forecastSEC +55% qoq; Hynix +45% qoqThe report believes Kioxia's guidance suggests further upside risk to these forecasts.
• Kioxia CY2Q26 OPM guidance74%Above the current NAND OPM forecast of around 60% for SEC/Hynix.
• CY1Q26 OPM comparisonSEC 58%; Hynix 57%; Kioxia 60%The three companies had similar CY1Q26 OPMs, so Kioxia's next-quarter guidance of 74% has read-through implications for peers.
• Kioxia NAND market viewThe market will be very tight in 2026 and 2027The company expects CY2026 NAND market bit growth to be in the high-teens percentage range and for CY2027 to remain undersupplied.
• Long-term NAND growth20% CAGRKioxia maintained its prior guidance for long-term compounded growth in NAND.
• Samsung Electronics common share target priceW320,000Based on the 2026E EV/EBITDA SOTP methodology; the report maintains Buy.
• Samsung Electronics preferred share target priceW245,000Based on a 23% target discount to the common share; the report maintains Buy.
• SK Hynix target priceW1,800,000Based on the average 2026E/2027E P/B and a 2.9x target P/B; the report maintains Buy.
• Kioxia latest table target price and close priceTarget price ¥48,000; closing price ¥44,450The chart shows an implied upside of about 8.0% as of 2026-05-15.

Impact & implications

The report is broadly positive on Korean memory stocks. If Kioxia's strong revenue growth and high OPM guidance can be extrapolated to SEC/Hynix, the market may raise expectations for NAND ASP, revenue and margins; at the same time, tighter supply extending into 2027, together with stronger demand from AI data centers and enterprise customers, should support the memory cycle. Kioxia's potential ADR listing may also serve as a sentiment catalyst through its equity linkage with SK Hynix.

Risks

• A significant deterioration in memory supply-demand conditions.
• Delayed technology migration.
• Demand for smartphones, PCs and servers weaker than expected, weighing on traditional memory demand.
• Samsung's HBM business progress falling short of expectations, affecting HBM revenue and profit.
• A decline in AI-related capex, weakening HBM and data center-related demand.
• A sharp contraction in Samsung's smartphone margins.
• Loss of share in Samsung's mobile OLED business.
• Uncertainty around Kioxia's ADR listing details and timing.

What to watch

• Whether Kioxia's actual CY2Q26 ASP, bit shipment, revenue and OPM meet guidance.
• Whether SEC and Hynix's subsequent NAND ASP and OPM forecasts are revised upward.
• Whether the tight NAND supply-demand balance extends through 2026-2027, especially for AI data center and enterprise demand.
• NAND inventory, pricing and margin signals in Samsung, SK Hynix and Kioxia's subsequent quarterly results.
• Progress on Kioxia's ADR listing and its impact on SK Hynix investor sentiment.
• Changes in AI-related capex and the transmission effect on HBM, data center SSD and enterprise NAND demand.