Kioxia's thunderstorm, Seagate's plunge, the "hottest" American storage stocks all fell sharply

Japanese storage chip giant Kioxia's poor performance has triggered a chain reaction in the U.S. stock market's storage sector. On Thursday, Kioxia Holdings announced that its adjusted net profit for the second fiscal quarter plummeted over 60% year-on-year, dragging down the stock prices of American peers Western Digital, Seagate Tech, and Micron Tech, casting a shadow over the strongest-performing tech sector this year.

Kioxia's net profit for the quarter was only 41.7 billion yen (approximately $284 million), a significant decline compared to the same period last year. The company is facing dual pressures from declining revenue and rising costs, raising market concerns about the overall health of the storage industry.

During Thursday's Tokyo trading session, Kioxia's stock price fell by 1.62%, subsequently affecting its overseas counterparts, with Seagate's stock down 7.31%, Western Digital down 5.29%, and Micron Tech down 3.25%. All these companies have seen triple-digit percentage increases this year, with Western Digital's stock rising as much as 269% as of Wednesday's close, ranking first in the S&P 500 index's annual gain list, while Seagate and Micron ranked third and fourth, respectively.

Market views suggest that Kioxia's poor performance may stem from its fixed-price supply agreement with Apple for mobile NAND chips. Against the backdrop of sharply rising spot prices, this pricing mechanism has prevented Kioxia from benefiting from market conditions, making it an outlier in the industry.

Kioxia's poor performance raises concerns about the AI boom in the storage market

The data and memory hardware industry experienced strong growth in 2025, driven by investments in artificial intelligence and cloud computing, leading to an unexpected surge in demand. Western Digital, Seagate, and Micron have all seen triple-digit percentage increases this year, making them one of the brightest sectors in the U.S. stock market.

Compared to the massive gains of these stocks this year, Thursday's pullback was relatively small, indicating that Wall Street has not yet developed serious concerns about the industry's outlook. Investors need to determine whether Kioxia's performance is an isolated incident or a signal of trouble for the industry.

Apple's supply agreement as a drag factor

According to market views, Kioxia's poor performance may be attributed to its supply agreement with Apple. The company has been supplying mobile NAND chips to Apple at preset prices, while market spot prices have surged significantly. This fixed pricing mechanism has prevented Kioxia from enjoying the price benefits brought by industry prosperity.

Western Digital and Seagate both exceeded market expectations in their recent earnings reports. Micron is set to announce its November fiscal quarter results next month, which will further validate the overall demand situation in the industry