AI Demand Drives Storage Giants' Profits Past Big Tech
Driven by the AI investment boom, the combined operating profits of five major memory chip makers (Kioxia, Samsung, etc.) surpassed those of the US Big Five tech companies for the first time last quarter. Surging demand for NAND and HBM in data centers created a supply shortage, pushing memory makers' operating margins to nearly 70%, while downstream tech giants face cash flow pressures from massive capital expenditures.
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IT Home reported on October 31 that, according to Nikkei Asia early this morning (the 31st), the AI investment boom has driven up demand for memory chips, resulting in a supply shortage. Consequently, the combined operating and net profits of five major global memory chip manufacturers—Kioxia, Samsung, SK Hynix, Micron, and SanDisk—for the previous quarter surpassed those of the top five US tech companies for the first time.
QUICK FactSet data shows that from July to September 2026 (June to August for Micron), the total operating profit of these five memory chip makers reached 32 trillion yen (approx. 1.35 trillion RMB at current exchange rates), which is 10 times higher than the same period last year.
During the same period, the combined operating profit of the five tech giants—Alphabet (Google's parent company), Microsoft, Amazon, Meta, and Apple—was approximately 25 trillion yen (approx. 1.06 trillion RMB at current exchange rates), representing a year-over-year increase of about 20%.
It should be noted that since Apple has not yet released its earnings report, market forecasts were used for its data.
Kioxia’s operating profit for the quarter reached 1.99 trillion yen (approx. 84.199 billion RMB at current exchange rates), which is 23 times that of the same period last year. Its net profit surged to 1.36 trillion yen (approx. 57.543 billion RMB), 33 times the figure from the previous year, marking the first time its quarterly net profit exceeded 1 trillion yen (approx. 42.311 billion RMB).
Among Japanese companies with fiscal years ending in March, only a few, such as Toyota Motor Corporation and SoftBank Group, have achieved profitability on this scale.
Kioxia expects its net profit for the current quarter to reach 1.36 trillion yen (approx. 57.543 billion RMB), 15 times that of the same period last year. The primary driver behind this profit growth is the surging demand for NAND flash memory for long-term storage in data centers.
Samsung Electronics’ operating profit for the previous quarter reached approximately 107 trillion won (approx. 533.074 billion RMB at current exchange rates), nearly nine times that of the same period last year. This makes Samsung the first tech company globally to surpass 100 trillion won (approx. 498.2 billion RMB) in single-quarter operating profit. Additionally, all high-bandwidth memory (HBM) products for next year are already sold out.
The profitability of memory chip manufacturers is reflected in their operating margins. In the first half of 2025, these manufacturers had operating margins of only around 10%, but today they have reached nearly 70%.
Excluding Apple, other tech giants are heavily investing in data centers, further exacerbating the tight supply of memory chips and allowing upstream manufacturers to reap substantial profits. However, as capital expenditure continues to expand, the market is beginning to question whether tech giants can sustain such investment levels in the long term.
Amazon’s financial report showed that its free cash flow deficit continued to widen in the previous quarter, causing its stock price to drop significantly in after-hours trading. Alphabet also recorded negative free cash flow for the second consecutive quarter, leading to a sharp decline in its stock price on Thursday.