Sony’s Stock Rallying On Raised Guidance, Gaming Profit Doubles

Sony's share price (TYO:6758) jumped 4.13% in Tokyo trading today, as the company raised it's full-year operating profit forecast, boosting bullish sentiment in the firm. The stock ended the day trading at ¥3,860, up 16.93% YTD, and breaking above the ¥3,800 level that has offered up some resistance in recent times.

The US ADR is also indicating a move to the upside with Sony's NYSE listed stock (NYSE:SONY) up 4.51% in the pre-market.

Sony raised its full-year operating profit forecast by 4% to 1.33 trillion yen ($9.01 billion), citing expectations of a smaller impact from U.S. tariffs. The company now anticipates a 70 billion yen hit from tariffs, a significant reduction from the 100 billion yen forecast in May.

This adjustment follows a trade deal struck between Japan and the U.S. last month, reducing uncertainty for Japanese exporters. Sony noted that the estimated tariff impact is based on rates as of August 1st, and the situation remains fluid.

The improved outlook also stems from a stronger profit forecast for Sony's games business. The gaming division is benefiting from robust sales of network services and favorable exchange rates. Sony sold 2.5 million PlayStation 5 consoles in the first quarter, a 4% increase compared to the same period last year.

Quarterly operating profit at the games business more than doubled to 148 billion yen, boosted by higher sales of network services and games not developed internally. While the console industry anticipates a boost from the release of “Grand Theft Auto VI,” its delay until 2026 could shift some demand to competitors like Nintendo, which recently reported strong early interest in its new Switch 2 console.

For the April-June quarter, Sony reported a 36.5% rise in operating profit to 340 billion yen, exceeding the 288 billion yen average of eight analyst estimates compiled by LSEG. This strong quarterly performance further bolstered investor optimism.

Sony's institutional ownership, at 58.91%, indicates strong confidence from major investors.

The company's transformation from a consumer electronics manufacturer to an entertainment and technology conglomerate has been a key driver of its success. Sony, once renowned for products like the “Walkman,” now boasts a diverse portfolio spanning games, movies, music, and image sensors for smartphones.

The recent upward revision of the full-year operating profit forecast and the strong performance of the gaming division are positive indicators for Sony. However, the delay of “Grand Theft Auto VI” and the planned spin-off of the financial unit introduce some uncertainty. For now, it looks as though bulls have eyes on a breakout, and a test of highs, but can sentiment hold?