Goldman Sachs raises Kaixia target price, AI storage demand pushes NAND cycle to higher peak According to BlockBeats, on July 1st, as the construction of AI data centers continues to drive up storage demand, Goldman Sachs raised the 12-month target price of Japanese NAND flash memory manufacturer Kioxia Holdings to 116000 yen and maintained a buy rating. The bank believes that the supply and demand tension in the NAND market has exceeded previous expectations, and the price increase cycle may continue until mid-2027, or even in some areas until 2028. Goldman Sachs announced in its report on June 30th that it has raised its operating profit forecast for Kaixia from FY3/27 to FY3/29 by 9%, 19%, and 29% respectively, and its EPS forecast has also been raised by 10%, 19%, and 29% respectively. The bank expects that the average selling price of NAND will significantly increase in 2026 based on the calendar year, and continue to grow by 38% in 2027, higher than the previous expectation of 27%. The report states that channel research in Japan shows that major storage manufacturers still prioritize investing capital expenditures in DRAM rather than increasing NAND new production capacity on a large scale; Against the backdrop of expanding demand for AI, the new NAND supply increment may not be significantly released until 2028. This has brought Kaixia back into the investor's view. In the past few cycles, the NAND market has been seen as a storage sector that is more prone to oversupply and more cyclical, as the number of participants exceeds that of the DRAM and HDD industries. But Goldman Sachs believes that the profit peak of this upward cycle may be higher than previously assumed by the market and can be sustained for a longer period of time. The underlying reasons include the rising demand for enterprise grade SSDs, the replacement demand brought about by tight supply in the HDD market, and the possible impact of US export controls on the equipment supply of some Korean manufacturers in their factories in China. The management team of Kaixia has recently released signals that they place greater emphasis on price and profit margins. Goldman Sachs stated that the company is not in a hurry to lock in shipments through long-term agreements, but rather emphasizes price discipline and gross profit margin levels. Due to the incomplete price negotiations for some first quarter Bitcoin shipments at the time of the company's release of guidelines, Goldman Sachs expects that Kaixia's FY3/27 first quarter operating profit, announced on July 31, may reach 1.417 trillion yen, higher than the company's guidance of 1.298 trillion yen and Bloomberg's unanimous expectation of 13600 billion yen. In terms of investment logic, Goldman Sachs values two points. Firstly, Kaixia is the world's third-largest NAND flash memory manufacturer with relatively strong cost competitiveness. Secondly, the company is gradually developing products targeting data centers, which are expected to become the fastest-growing segment in the NAND market. With the increasing demand for high-performance storage from AI servers and enterprise SSDs, Kaixia has the opportunity to achieve higher profit margins during the price increase cycle. However, Goldman Sachs also reminds that the cyclical nature of the NAND industry has not disappeared. Risks include a slowdown in AI investment, the rise of Chinese NAND manufacturers, a decrease in profit margins due to rising costs or fluctuations in capacity utilization, a significant appreciation of the yen, and a slowdown in NAND demand for non AI applications. In other words, Goldman Sachs does not believe that the structure of the NAND market has permanently changed, but rather that this round of AI driven supply-demand mismatch has pushed the peak of the cycle to a higher position than before.