Many memory chip stocks skyrocketed over the past year as the AI market's demand for more memory chips for data centers outstripped the global supply. One of those top stocks was Sandisk (SNDK +1.08%), which has rallied nearly 580% year to date.
Another winner was Kioxia (KXIAY +5.37%), which has rallied about 560% this year but is often overlooked because it trades over the counter. Let's take a closer look at this memory chipmaker and whether its stock will keep rising in the second half of the year.
Image source: Getty Images.
What does Kioxia do?
Back in 2000, Toshiba's (TSHTY -8.07%) memory chipmaking business launched a joint venture with Sandisk to co-produce memory chips in Japan. That partnership survived Toshiba's spin-off of its memory business as Kioxia in 2018, as well as Western Digital's (WDC -0.34%) acquisition of Sandisk in 2016 and its spin-off as an independent company again in 2025.
Kioxia and Sandisk recently extended that manufacturing JV through 2034. The JV's two massive plants in Japan form the world's largest flash memory production base. Since Kioxia operates the actual facilities, Sandisk agreed to pay Kioxia $1.165 billion in "access fees" in installments between 2026 and 2029 as part of the latest terms of the JV's extension.
OTC: KXIAY
Key Data Points
Therefore, Kioxia and Sandisk mutually benefit from each other's growth. Both companies benefited from soaring demand for memory chips in data centers for AI applications, turning memory makers from cyclical hardware companies into high-growth AI infrastructure plays. As that demand soared, their pricing power improved and their margins expanded.
That's why Kioxia's revenue surged 59% in fiscal 2025 and 37% in fiscal 2026 (which ended in March). It also turned profitable again in 2025, and its net income more than doubled in 2026.
From fiscal 2026 to fiscal 2028, analysts expect its revenue and net income to soar at CAGRs of 118% and 232%, respectively, as the AI boom continues. It also aims to aggressively ramp up its production of higher-margin data center and enterprise AI server memory chips to reduce its long-term dependence on the lower-margin smartphone and PC markets.
Yet Kioxia's OTC shares still trade at just 8.5 times this year's earnings -- presumably because it's still valued as a cyclical memory play rather than a high-growth AI play. If you think it's the latter instead of the former, then it's not too late to buy this high-flying stock. But if you want to invest in Kioxia, it's probably smarter to wait for its ADRs to formally list in the U.S. in its upcoming IPO this year rather than buy its thinly traded OTC shares.
